Socialnomics Revolution 3

Erik Qualman yesterday updated the Social Media Revolution YouTube video which, once again, reiterates the growth of social media in the world.

What does this mean for Loyalty Programmes? It means serious adaptation is required to ensure the customer remains engaged.

The Ford Explorer Facebook launch, which generated more traffic than a Super Bowl advert, reiterates the opportunity for engaging with customers utilising alternative media channels. This combined with the 80 million Farmville Farmers across the world, reiterates the untapped Gamification opportunity.

What Gamification shows us, is not just a new way to encourage consumers to shop with you, but the importance of how those consumers engage with you outside the bricks and mortar. With 90% of consumers trusting peer recommendations versus 14% trusting advertising, marketing investment needs to be focused on encouraging consumers to share their positive experiences and to reward them for doing so. Because your customers are talking about you, whether or not you have a dedicated Facebook page, Twitter or YouTube account. So you can either leave it to chance, or, like Starbucks with their MyStarbucksIdea.com, you can get involved with your consumers to help grow your business

"Prehaps sizes could be in, you know, English?"

Bob Pearson, Dell's VP of Communities and Conversations says it all - "Is it better to listen to tens of thousands of customers’ vote on ideas, discuss them and participate with them over a period of a couple of months, or get 10 customers in a room, feed them sandwiches and listen to them behind smoked glass?"

Digital marketing technology – the best thing since sliced bread?

I recently attended the Shopper Marketing conference in Sydney which featured speakers, workshops and case studies on how to best drive sales, engage shoppers and subsequently influence their purchasing power while in store.

One consistent theme at the conference was that digital marketing technology is the latest trendy must-have for retailers and manufacturers. From iPhone apps, digital billboards and interactive LED screens, digital was touted as the next best thing.

However, many of the opportunities lacked a strong business case and ROI - primarily because the core foundations of new product development were missing. This means for marketers - beyond the "cool" factor, the ability to get a solid ROI out of the innovation is missing.

It's a good reminder, whether working with loyalty programmes, promotional communications, or iPad apps, to look beyond the trend to ensure that the opportunity;

• meets a need that a customer has yet to realise they have (if not meeting an existing need);


• relates to your product or service and the purpose of your business;


• tells you something about your customer that you can use in your business;


• is difficult for your competitor to replicate.

And don't forget, if your customer service is poor, your product unappealing or the pricing is wrong, the coolest app will not save your sales.

Loyalty expert Nathalie Moolenschot joins us from Air New Zealand's Airpoints

We're very pleased to have Nathalie Moolenschot join our team from Air New Zealand Airpoints. We've known Nathalie for some time and she claims to have been through a 10 year job interview to join us as our Strategy & Rewards Services Director.

She has a history steeped in the best of New Zealand loyalty programmes. We first met Nathalie in the 1990's at Westpac where she worked on their hotpoints loyalty program (our client for the last 11 years). She moved over to their then new joint venture with the Red Sheds - The Warehouse Financial Services - and drove card acquisition (and we're fortunate to be able to count Warehouse Financial Services as a client since 2009) . She moved to BNZ to work on their loyalty programmes - Fly Buys and GlobalPlus (their partnership with Air New Zealand Airpoints). Finally she joined Air New Zealand where she launched the Fly Buys and Air New Zealand Airpoints partnership ( a world first).

Nathalie says “I’m excited to be working at the forefront of loyalty. With the continuous pressure on companies to achieve results, my role will be to make sure that we continue to help our existing and prospective clients develop effective and dynamic loyalty propositions to exceed those targets. I will also keep challenging the traditional loyalty program concepts with innovative solutions regardless of industry. This focus will also benefit our suppliers as we develop partnership models moving forward”.

She'll also be sharing here thoughts here on our blog.

Driving better returns from retention dollars

M1 Telecom - Singapore's smallest telco lost more customers this year than last year - 33% more customers to be precise (their customer churn rate increased from 1.2% per month to 1.6% per month). This on the back of a retention budget that increases 12% in 2008. Not the kind of result they were likely expecting.

Customer retention expenditure needs to be focused and disciplined. Sutowu of Carlson Marketing Asia Pacific has outlined a disciplined investment taxonomy for retention dollar investment.

Our man Sutowo is based in Singapore - he's responsible for our Decision Science Services in Singapore, Malaysia, India, Japan and Hong Kong.

Published in the Marketing Institute of Singapore's April journal issue, Sutowu's model relies on 3 pillars :

1. Customers need to be targeted at the right time
2. The right customers must be selected in the targeting
3. They must receive the right offer or value (which in our business is often driven through a loyalty programme)

All of this is underpinned by frequent Test and Learn programmes.

Sutowo's full article is available here.

Gamification - what loyalty programmes should have been delivering?

The gamification of everything is afoot. Gamification (also known as Funware) is about integrating game mechanics, such as say leader-boards, into non-game environments such as marketing campaigns and health care.

Gamification definition care of Strategic Synergy

The movement is largely lead by professional game designers from the video and online games industries. One of the first industries they've latched onto as examples of games outside of the video game industry are loyalty programmes. These programmes have "points" to keep score with, members can "level up" to more exclusive tiers and pick up "powers" such as airline lounge access while redeeming for rewards along the way.

Gabe Zichermann's view on loyalty systems

But according to these game designers - loyalty and frequent flyer programmes are not always particularly well designed games. They don't do a good job of engaging members on the journey towards redeeming a reward. Gabe Zichermann is one of gamification's leading gurus and he proposes a fifth P be added to the marketing mix - Pleasure. He describes marketing's task today as "creating a long-term engagement with the consumer that moves them along what we call, ‘the player journey’ – the long-term emotional engagement of the user with the brand.”

In Zichermann's motivational hierarchy gamers are after four things in decreasing order of importance and notably for programme operators, increasing order of cost to the provider:

1. Status
2. Access
3. Power
4. Stuff

Status, access and power are areas that frequent flyer programmes excel in. Higher status members can clearly be seen accessing the faster queues, priority check-in and better lounges. Status is only status if it's visible to others. At the same time - most airline frequent flyer programmes offer only elite status and "leveling up" for their very top members. If they were to offer a member early and multiple opportunities to climb through status tiers, they'd be more like games and, according to Zichermann, more engaging.

Stuff in all loyalty programmes are the rewards offered in exchange for points which have a hard cost to the loyalty programme provider. Stuff though is only accessed at the end of the loyalty cycle after much accrual and its impact is trumped by status, access and power.

It's hard to imagine a loyalty programme that reduced the value of the stuff on offer in exchange for more status but one has just launched in the hotel sector. The Global Hotel Alliance is offering a loyalty programme without points but with very clear status, access and power. They have Gold (1 night stay), Platinum (10 nights) and Black (30 nights) tiers to enable early and easy leveling up. Each tier provides progressively better access from free internet at 1 night to surf lessons or helicopter tours for Black.

A well gamified loyalty programme would become a reward in itself. According to Zichermann "It’s the system that’s engaging, not the reward” he says. “That’s what game designers know really well, and this is what gamification is unveiling to the marketing world.”

1 COMMENTS:

Jeremy Sweetman said...

Thank you Simon for your informative article.

Coming from a long heritage of digital communications and (more recently) game design, I'm excited to see the evolution of gamifying one's brand becoming popularized within the media.

As a practitioner, I was lucky enough to attend one of Gabe Zichermann's talks recently and, unquestionably, the concept of gamification couldn't ask for a better advocate. Obviously Gabe isn't alone in his promotion; personalities from both gaming & marketing circles are starting to validate the process of gamifying both brands and experiences.

Honestly, as marketing professionals, the concept of changing (customer) behaviour through 'fun' activity is not new, although despite 'The Horizon Report - 2011' predicting 2-3 years before the concept becomes mainstream thinking (particularly in education), I believe pioneering in this area will ultimately return significant gains and deliver better experiences all round.

Simon, as a leading practitioner within your field, I'm curious how you would evaluate whether brands would be suitable candidates for a gamified experience - beyond the currently accepted loyalty paradigm?

In addition, I'm conscious that circumstances could exist where a gamified experience could ultimately over-shadow the value of the 'thing' being sold e.g. Jet Blue and (in my opinion) Nike+. Hence are interested on your thoughts surrounding this potential scenario?

Thanks in advance for your insight.

Jeremy Sweetman

MARCH 17, 2011 4:47 PM

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.