Loyalty 101: How Savvy Shoppers Get the Most Out of Loyalty Programs

For years I have collected miles with a few different airlines, but have managed to fly only twice using my miles. Here, in one sentence, you have the problem with airline loyalty programs, but also my loyalty strategy.

Airlines want you to fly with only them and collect miles. But they really don’t want you to use the miles to fly – or so it would seem from the way the programs are structured. It is a “game” and you need to understand how to play in order to win. In fact, modern loyalty programs are morphing based on gamification techniques. More on this later.

Flawed loyalty strategy

Having been treated to a Loyalty101 class by an American colleague, I’ve discovered I’m doing it wrong. First, you need to fly with just one carrier, no matter how inconvenient it may be in terms of routing, to make sure that you are at the highest level in the loyalty program. These high levels are the only place you get real benefits. My loyalty mentor has over 1 million miles on United and gets access to lounges, automatic upgrades, and priority access to seats. And on every upgraded flight, she collects miles at a higher rate – like compound interest. So she will happily take United flights which include a change rather than take a direct flight with an alternative carrier. [Read more...]

56 Billion Reasons Why You Need the Two-Second Advantage

zara-first-post2The story goes that a motor bike roars up to a red traffic light in La Coruna in Northern Spain. It stops alongside a black town car. From inside, the passenger glances out and sees the young biker leaning over the handlebars. His jean jacket has appliqued patches… a throwback to the 1970s. The old man grabs his phone and calls an aide in the office. Without taking his eyes off the jacket, he describes the jacket’s stitching, its shape and color. He finished the call with a single instruction – ¡Hacedlo!“ – Make it.

40 years ago, Amancio Ortega founded Zara on two key principles: give the customers what they want and give it to them faster than anyone else. As the story illustrates even today, those two key principles are at the heart of Zara, the world’s biggest fashion retailer.

Zara stores refresh their stock twice a week and receive orders in 48 hours or less. That has required some key organizational and supply chain decisions. “We never go to fashion shows,” says Loreta Garcia, a 23-year Zara veteran who heads up Zara Woman’s trends department. “We track bloggers and listen to customers, but we change our opinions all the time,” she says. “What seems great today, in two weeks is the worst idea ever.” [Read more...]

From Transactional Value to Emotional Experience – Converting Loyal Customers into Fans

 

If you spend even few minutes on the Web you will notice almost every business asks its customers to become a fan on its Facebook page. It doesn’t stop here; most companies ask you to like partner sites to accumulate loyalty points. In the last couple years, this major shift in how businesses approach customer loyalty, from transactional to emotional, is changing the game. Gone are the days when you knew if you spent so many dollars you would be rewarded with a defined value to redeem in a set way. Customers prefer to be surprised with new, innovative ways of rewarding their loyalty. This is not a new science; it always existed in sports, in a different way though. Wonder why people become fans of a sporting team and remain lifelong supporters? It is because their team satisfies their desire to be included in a group they like and want to be a part of.

Businesses understand the need to take loyalty beyond transactional value to a level of emotional gratification where loyal members turn into fans. One of the surest ways is the experience provided to customers in a dynamic loyalty program that can offer benefits in real-time scenarios. An airline is often exposed to flight delays and cancellations, which customers undoubtedly dislike. What if the airline provides its frequent flyers with seats in the earliest possible flight, or a free upgrade, or permissible change in destination? The airline not only turns an unlikely event into a good experience, but also offers an emotional value to its loyal members motivating them to be fans of the airline. Since they cannot offer benefits to all their inconvenienced customers they can rank customers on their social media behavior, and not just on a traditional transactional basis. [Read more...]

Loyalty Program Gives Nationwide Pharmacy a Makeover to the Tune of a 9.3% Increase in Sales

 

The U.S. market for health and wellness products is growing at a rapid pace and is expected to reach $170 billion by the end of 2012. Companies competing in this space will strive to boost consumer spend at each visit by providing a one-stop store for all their needs – pharmacy services, OTC medicines, homeopathic, beauty, and personal care products. To maximize customer spend while also promoting repeat shopping, companies in this space desperately need to have loyalty programs that cover all their touch points with the customer.

When Pharmaca, a pharmacy that looks to revolutionize the way we shop for health and wellness products, embarked on a loyalty initiative, one of the company’s goals was to reinforce its branding as a go-to wellness destination to drive higher engagement between pharmacy and retail.  They sought to encourage customers to fill both their conventional prescriptions needs and their need for alternative products in one location. [Read more...]

Capture Market Share from Brand-Name Competitors by Betting on Your Customers

How does the sixth-largest mobile carrier compete with brand giants such as AT&T and Verizon? They come out swinging with a counter-intuitive stroke of brilliance by sticking to the belief that attrition is best fought by completely eliminating contracts for all existing customers. Think about it: a strategy to keep customers in contract by dropping the penalty for breaking out! It’s the perfect irony. Turns out, it is also perfect marketing.

The majority of Americans  in the mobile phone market already have a mobile device and contract so carriers are resorting to stealing customers from each other. 82% of American adults own a cell phone, Blackberry, iPhone or other smart phone. The customer’s question has evolved to: what can you do for me that my current provider doesn’t? The mobile market is changing drastically, leaving carriers scrambling for ways to stay ahead of one another. Many carriers are finding out how beneficial it can be to use loyalty programs to invigorate your network of customers and ultimately increase growth.

Teaming up with TIBCO Loyalty Lab, U.S. Cellular brought to fruition its visionary concept, called the “Belief Plan,” powered by enterprise functionality that orchestrates a complex landscape in which most users own multiple lines in different stages of contract cycles. [Read more...]

Loyalty vs Complex Events

Loyalty LabTIBCO Software has announced the acquisition of Loyalty Lab – a company specialising in cross-sell and up-sell solutions, which for TIBCO customers (such as in telco, retail and banking) has often meant applying CEP to analyze customer needs in real-time, often with a dose of data analytics, and responding accordingly and quickly. The Loyalty Lab founders commented:

Loyalty is no longer a nice to have—in today’s mobile and social media-centric world, you gotta have it. When we started the business, sometimes we had to spend hours with prospects explaining what loyalty was and how brands might be advantaged by having automated systems programmatically up and cross-selling their new, better, next-best and evangelistic customers regularly. We intuitively knew but now emphatically know that it’s just 15% of a brand’s customers that almost always represent 85% of their profits.