February 10th - We present international mobile marketing case studies at Auckland's AmCham

We at Carlson Marketing count ourselves fortunate to have been trusted by our international clients to mobilise their businesses through apps, smartphones and mobile sites over the last few years. We'll be sharing some of our key learnings at the American Chamber of Commerce in Auckland on February the 10th.

Doug Rozen (our Senior VP Creative, Interactive, Media & Mobile based in the USA) will present a working model built up through his hands-on operational experience. He'l specifically discuss case studies from our clients:

• AT&T - a leading USA based Telco
• Coca-Cola - their new direct to customer strategies
• Amtrack - a leading US rail network
• The UK’s Nectar loyalty programme (Nectar is our sister company).

He’s a frequent speaker at mobile marketing events and most recently presented at ad:tech in New York.

Doug Rozen presenting at last year's loyalty conference in India

According to Doug "Around the world there is significant consideration and investment being placed in mobile marketing. The mobile channel offers not only a means to distribute marketing messages to customers on the go but also provides a litany of tactics. While many marketers are focused on the technological marvels that can be achieve through apps, there is a rising opportunity and more importantly a customer demand to add mobile as part of multi-channel CRM initiatives".

Doug Rozen interviewed at ad:tech in New York in November 2010

Date : Thursday the 10th February

Place : The University of Otago House, Street Level, 385 Queen Street Auckland

Time : Registration 3:45 pm

Presentation 4:00 pm

Refreshments 5:00 pm

Concludes 6:30 pm

If you would like to be our guest at this event please email me at simon.rowles@carlsonmarketing.co.nz or call on (09) 524 1122

Rick Ferguson leaves Colloquy and joins our family

Rick Ferguson, most recently Editorial Director of Colloquy has joined our parent Groupe Aeroplan as Vice President Knowledge Development.

Rick picks up a role as thought leader for our group. If you've been to any of the key loyalty conferences in the Asia region or further afield including the USA, Europe and Canada - you'll likely have heard Rick speak. You've probably also read his analysis of our loyalty industry in the weightier publications such as the Wall Street Journal, Forbes, Fast Company and others where he is quoted as a loyalty marketing expert.

There's two major trends we've seen developing in our market that Rick has recognised and analysed on the global stage.

The first is the struggle that travel loyalty programs had in retaining both members and their engagement during the recession (while the opposite has been proving true in other industries, especially retail) . We saw Airline Frequent Flyer and Hotel Frequent Stayer Programs, along with the capital intensive industries they represent, struggle in 2008 and 2009 (and even into 2010). Quoted in AdWeek , Rick commented that “The disparity between travel and the other two industries featured in our latest research mirrors the shift in consumer spending away from the travel sector, in which both business and leisure travel have seen cutbacks, and toward retail categories, particularly in the everyday spend categories of grocery and fuel.”

Rick has also contributed some excellent analysis on another key trend that's evolving and beginning to mature in our market : the targeting and engagement of brand advocates through Word of Mouth. We define Word of Mouth as the output from a brand advocate. It's the opposite of Amway. Customers will recommend a product or service to friends and family not because they get a reward (or more sales as they would in Amway) but because they believe it's the best product or service. (The Net Promoter Score is a good way of determining who is a likely WOM candidate). Rick commented in Adweek that marketers “should find brand champions buried within their program memberships, and build relationships that reward them for positive word-of-mouth activity.”

Rick's thought leadership and deep experience is going to be let loose on a (now) very wide range of our metrics, data, experience and learnings.

Code-On-Pack loyalty programme success for Coke and P&G

New Zealanders have long been keen collectors of loyalty points for everything from their retail shopping to credit card use and airline flights. The success of these programmes has seen them quickly added to the arsenal of FMCG marketing professionals. But it’s not just entrepreneurial grocery brands at the bleeding edge of the new wave that are adopting loyalty programmes; the core of the FMCG market has recognised their value, with two multinational companies, Coca-Cola and Procter & Gamble, leading the charge. Both are our clients.

So what makes these programmes so valuable for those implementing them? It all boils down to data— actual customer transaction information on who bought what, when, where and for how much—that can then be used to determine which people might be enticed to buy next, and craft one-to one communications to get that sale.

From Flat to Fizzing

Many soft-drink brands are caught in the feast-or famine cycle of traditional promotion marketing. And the indiscriminate impact of these promotions leads to unpredictable market share lifts and losses across key segments. In both Britain and the US, Coca-Cola found itself in a cycle of price promotions with no increase in sales revenue or customer loyalty. What’s more, those programmes became increasingly expensive to plan and execute.

In the UK, Coke dealt to this with one of the best customer loyalty programmes of its type. The aim was to keep customers engaged between promotions to keep sales buoyed. We were able to leverage the Coca-Cola brand equity along with a large customer database to secure some enticing reward offers. Its customer loyalty programme, Coke Zone, is a real-world equivalent of click-throughs.

Unique codes are printed inside the labels of all Coke bottles and multi-packs. Consumers enter these online or via text and, in doing so, create a continuous transaction history and picture of who they are. Coke can then tailor its marketing and offers accordingly. The result was increased volume year-over-year, with loyalty communication offers rising to an open rate of 49% and a click-through rate of 71%.

Coke has redefined how a loyalty programme website should work. So many consumers are now entering codes that Coke Zone is the most visited FMCG website in the UK. It has eight times more visitors than Pepsi and they spend ten times longer on the Coke site than its rival’s portal.

Redefining Online Rewards

Coca-Cola faced a similar situation in the US. Its existing points-based programme was expensive and lacked a sound rewards and communications strategy. The My Coke Rewards ‘build-it-and they- will come’ approach to consumer engagement was more than just a bad assumption—its old rewards strategy was not financially sustainable.

The programme was reworked and its re-energized version saw a 16.8% increase in code entry online. Logins to mycokerewards.com increased their open rate by more than 220%, indicating multiple logins, and the rise in code-entries-per member reached 108% over the control group.

A more refined approach

For another of our clients, Proctor & Gamble in the USA, refining its already effective customer-loyalty strategy delivered better results. The manufacturers of Pampers nappies, Proctor & Gamble had tested loyalty marketing and knew the strategy would work. Again, customers went online to enter unique codes printed inside each Pampers pack. The challenge was to refine the strategy and improve the programme. Using data already gathered allowed P&G to intervene at vulnerable switch points where a customer might be tempted to move to a competitor’s brand, and also at key points in their relationship with the Pampers brand. Because Pampers products are only relevant to consumers for a short period of time, the aim was to maximise that timeframe and build a relationship with parents. Carlson’s solution took the best of what airlines and credit card companies had already learned and applied it to the technology platform, consumer experience, rewards, partners, segmentation and trigger communications. The outcome has been improved results for Pampers on all fronts. Active participation among consumers has increased by 20%. The efficiency of the programme’s rewards budget improved by 10 percent and the overall ROI rose by 12.5%.

Our results for our CPG clients:

1. 21% increase in share amongst participating consumers
2. 12.5% volume increase year on year
3. Revenues from strategic partnerships

[First published in New Zealand Marketing Magazine in December 2010]

RESPONSES

1 COMMENTS:

Phil Hawkins said...

So the question is, are product-specific programs such as Coke Zone sustainable in this neck of the woods? I can only presume that lack of scale has prevented Coke undertaking anything similar to date in Australia or New Zealand? There are a few eyes in Australia on the recently launched
Nescafe Cup of Rewards program. It will be interesting to see if the average household's instant coffee consumption is enough to garner interest in the program, discussed further here.

DECEMBER 16, 2010 4:13 PM

Air New Zealand's Airpoints innovations (again)

Air New Zealand has recently delivered a comprehensive renewal of the Airpoints Dollars Frequent Flyer scheme. While it follows similar actions by Qantas Frequent Flyer in Australia it is a very Kiwi and innovative solution.

First mover - Qantas in Australia

Air New Zealand's new innovations follow moves in Australia by Qantas over the last 3 years. Qantas first signaled a partial listing of it's 5 million member Frequent Flyer Programme in 2008 which could have fetched it AU$1.5billion (for many airlines there's more money made in the frequent flyer scheme than in flying planes). The listing strategy was based in large part on Carlson Marketing's parent Groupe Aeroplan's success in Canada according to Simon Hickey - boss of Qantas Frequent Flyer in 2008. Qantas changed tack, held onto ownership of the Frequent Flyer programme, (which produces more profit than subsidiary Jetstar) and took it on an aggressive expansion drive.

Most frequent flyer programmes struggle with too many points being issued (typically by partners such as credit card companies and at a a compound annual growth rate of 10%) and not enough seats being available to redeem them (new planes add only 5% more seats to the global fleet per annum).

Qantas first addressed the redemption options from difficult-to-find-free-flights to include an online store stocked with merchandise and gift cards (full disclosure - we deliver this service for Qantas) and an any-seat, any-Qantas-flight redemption options. It then required all banks who were offering Qantas Frequent Flyer points on their credit cards along with other rewards to offer cards with Qantas Frequent Flyer points only (know as Direct Earn credit cards) - or not at all. Then last year it struck a deal with Woolworths Australia in which Woolies offered Qantas points to its shoppers and along the way added 700,000 new Qantas Frequent Flyer members.

The result? Depending on who you talk to either Qantas or FlyBuys is now the biggest and best loyalty programme in Australia. Either way - FlyBuys has a new attacker. And for Qantas it's a big earner : in the year to June 30, it generated underlying EBIT of A$328 million and now has a base of 7 million members.

Air New Zealand's strategy here

Air New Zealand didn't face the issues of limited seats being available for redemption in its Airpoints programme. In fact it could be argued that anything that got passengers onto it's planes was positive with the Centre For Aviation describing them as a "small airline getting smaller". The world first Airpoints Dollars innovation introduced a few years ago means any seat on any Air New Zealand flight could be bought with Airpoints (rather than the roughly 3%-5% of seats reserved per plane in other classic frequent flyer schemes).

Air New Zealand's advance in 6 steps

1. Flying on Air New Zealand flights had always gave customers Airpoints Dollars which could be redeemed for..
2. ...more Air New Zealand flights.
3. BNZ had long issued the GlobalPlus credit card on which customers earned even more Airpoints Dollars. ANZ (our client), Kiwibank and American Express have all issued new Airpoints Dollars credit cards over the last year.
4. Then recently - Air New Zealand enabled Fly Buys customers too to convert their Fly Buys points to Air New Zealand flights.
5. The really interesting piece has been the issuing of a new Airpoints membership card last month which is co-branded with Fly Buys by Air New Zealand. With this Airpoints card customers can now earn even more Airpoints Dollars (earned instead of Fly Buys points) at any of the Fly Buys merchants. This is a significant innovation and not one we've seen elsewhere. It's a collaborative local solution which is in contrast to the development of Qantas's programme in Australia.
6. The unexpected piece has been last week's release of an online Airpoints gift store. Airpoints Dollars can be used to buy goods and gifts from a $50 digital camera up to a $1,670 high end camera. Some goods are delivered in the same fashion as Fly Buys such as the new iPod Nano which must be picked up in store from Noel Leeming.

There are strong arguments in Australia to support the primacy of either Qantas Frequent Flyer or FlyBuys. In New Zealand - it looks like Air New Zealand's trumped them all.

New generation fuel rewards - the Smart new orange card

While we're all now used to fuel dockets in New Zealand we may soon have a better alternative available to us. It's the result of solid Kiwi entrepreneurship together with some solid marketing discipline.

Australia - 1

Woolworths Australia (who own Countdown and the rest of the Progressive Enterprises stable here) were offering fuel dockets (as we currently have here in New Zealand) successfully in 2005. At the Caltex Woolworths sites there was an average 80% increase in petrol sales. When the offer was 12 cents per litre, sales went "through the roof ". Also - sales appeared to be up in grocery competitor Coles who also offered fuel dockets - maybe as much as 3.8%.

Woolworths Australia have since progressed to offering an orange card which collects the various cents/litre discounts (doing away with the paper dockets) in 2007, launching an online community the same year, partnering with Qantas Frequent Flyer in 2009 and then this week launching a Woolworths Everyday Rewards Qantas Frequent Flyer credit card -with fuel discounts. Pretty impressive customer strategies.

New Zealand - 1 up?

Smartfuel is a Kiwi startup running a pilot programme in Palmerston North. Like Woolworths Australia it offers an orange card that collects fuel discounts. Unlike the Australian example these discounts can be earned at an array of retailers who print the running total of the discount at the bottom of the till slip. They also accumulate into a single large cents/litre discount which can then be used at the next fuel purchase . And there's two major chains participating : fuel discounts can be redeemed at either Mobil or Caltex.

Scott Fitchett (owner of the Caltex in Palmerston North) is the Smartfuel inventor. Ian Sutcliffe is the experienced marketer (previously head of marketing at McDonalds and Westpac and a past 1to 1 Customer Champion). The offer to customers is pretty compelling. So too is the offer to the participating retailers. While they pay for the discount at time of purchase - they don't pay for discounts which aren't used by the customer. These unused portions are credited back to the retailer.

Fuel discounts are not materially costly for the retailers who offer them (maybe a 1% to 2% discount equivalent) but they drive an out sized customer behaviour change. When fuel dockets first became popular one analyst noted that "The discount is worth $1.60. You wouldn't stop in the street to pick up $1.60 but customers are changing retailers for it."

3,000 Foursquare users in New Zealand (maybe).

On Saturday, the mighty All Whites drew 1 all with Honduras at North Harbour Stadium. The official crowd was 18,153. There were 12 Foursquare users checked-in there ( I checked - I was one of them).

Foursquare had a penetration of 0.0661% of that crowd. If that is true (probably not) and all other factors remain constant (they definitely don't) this implies that 0.06% of Kiwis are Foursquare users. Or : of the 3 million Foursquare users globally - 3,000 are to be found in New Zealand.

Foursquare seems made to be part of a loyalty programme. Air New Zealand's adoption of a Foursquare special attached to it's Airpoints Frequent Flyer Programme almost makes it a mainstream technology in New Zealand. But - it's not. Not yet anyway.

Maybe straight up penetration is the wrong way to view a social tool like Foursquare. In social technologies we know there's a very strong distribution operating. The most voluminous poster in a community posts twice as much as second highest poster and they in turn post twice as much as third highest poster. We also know that the 1:9:90 rule is in play :

• 1% of people post lots a frequently
• 9% of people comment on these posts
• 90% of people do nothing other than read them (and maybe in Facebook 'like" things)

Foursquare check-ins can be shared on Facebook and Facebook is now the biggest site in New Zealand (bigger than Trade Me, bigger than Google). So - maybe sharing by the few to the many is what's important here. And Facebook Places is coming : we'll all be able to share where we are Foursquare style inside Facebook (on smartphones and some feature phones).

In general : we over-estimate the impact of a technology in the short term and under-estimate it's impact in the long term (which I thought was coined by Bill Gates but is actually from the head of the Human Genome Project).

New Zealand credit card loyalty programmes rated by Cannex in their inaugural study

Cannex - the research company which reviews banking products and gives the best ones 5 star ratings - have undertaken the difficult task of doing the same for credit card loyalty programmes. In their inaugural review in August they rated 33 rewards programmes tied to 44 credit cards in New Zealand.

It's difficult because there's a multitude of variables and special options in these programmes which don't lend themselves to standardisation, but it can be done. To achieve this they've split the rewards cards into 2 main buckets:

• General rewards programmes (that give you gift cards, merchandise. experiences, trophies and the like)

• Flight rewards programmes - all of which give you Air New Zealand's Airpoints Dollars (they appear to have missed ANZ Bank's Qantas offering)

What's more difficult (maybe impossible) to asses is the benefit to the customer because there are no average customers. However Cannex have done a solid job of identifying two different customers who use these cards :

• Those who spend $24,000 per annum on their credit cards

• Those who spend $60,000 per annum

The results? The best card in the market if you want General Rewards and spend $24,000 a year is the Warehouse MasterCard. This delivers $137.42 return for that $24,000 spend according to the Sunday Star Times review of Cannex's ratings. [Full disclosure - Carlson Marketing deliver this programme for The Warehouse].

Cannex dished out 5 Star ratings (Outstanding Value) to:

• General Rewards - ANZ's World Visa programme and Westpac's hotpoints programme [Full disclosure - Carlson Marketing deliver these programmes]

• Flight Rewards - American Express's Air New Zealand Airpoints programme and BNZ's Global Plus programme.

The Sunday Start Times article recommends to card carrying customers that "Rewards should not change your spending habits, even if they change the way you pay". Changing the way you pay is precisely what rewards programmes are designed to do.