Mr. Johnson

Sales & Marketing

New School Incentive Programs: Data, Insight, Sustainable Behavioral Change

By Mark Johnson, President, Loyalty 360 - The Loyalty Marketer’s Association

Since the launch of S&H Green Stamps in the 1930’s, loyalty marketing has blossomed into a $4 billion industry. And while the traditional collect now/redeem later points scheme had proven effective for years, social media and new technologies have made it well within the capability of marketers to use data intelligently to build strong customers relationships and gain a long-term sustainable advantage.

As I explained recently on FoxBusiness.com, this shift is moving the market away from the old school mentality of looking at what their “customers have done for me.” Traditional cookie-cutter loyalty programs were focused on the short-term developed either as a defensive strategy or in hopes that they could incent a certain (usually not measurable) behavior.

Instead, the market is rightfully evolving to a new school mindset that is focused on data, insight, and sustainable behavioral change. In this new customer centric world we live in, actionable insight that can effectively drive sustainable behavioral change is the “caldron call” of the market, it is the areas where brands are asking for “help.” To sum it up, the new school mindset focuses on two key elements: transparency and relevancy.

Transparency:

Today’s customers want their brands to be vulnerable and almost compliant to them. They want to know that if the brand makes a mistake they recognize it, are accountable and address it in a pro-active manner to the individual to restore effective engagement. Brands cannot be afraid to show the good, bad and the ugly. They need to have a free-flowing two-way conversation --- letting their customers vent or praise and then letting customers know they’re listening and that they care and most importantly respond relevantly to them in the time, medium, and message they require.

Southwest Airlines recent incident with famed filmmaker Kevin Smith is a great example of leveraging the transparency of the web. When Southwest escorted Smith off a flight because they claimed he was too heavy for a single seat ticket what did Smith do? You guessed it. He pulled out his cell phone and tweeted about his experience --- venting his anger and frustration throughout cyberspace.

While this would have been a public relations nightmare for many brands, Southwest Airlines makes it a practice to respond quickly enough to customer complaints in order to turnaround an otherwise disastrous situation. In fact, upon learning about what transpired with Smith, Josh Neal, product marketing manager for Southwest Airlines, sent a plethora of tweets to Smith acknowledging the incident while reinforcing Southwest’s commitment to customer satisfaction.

This level of transparency sets Southwest Airlines apart. In 2007 the airline launched a proactive customer service communications department which measures customer experience system-wide and looks at pipelines where complaints could surface. They have a process for gathering facts and experiences, determining the validity of the grievances, and pinpointing what they should address. From there, they craft responses unique to each experience. As Fred Taylor, senior manager of the department, tells DestinationCRM.com, (“Extreme Loyalty Requires Extreme Commitment,” February 15, 2010), the airline’s culture is centered on customer experience. In his messages to Southwest customers (which are disseminated within 24-48 hours of the experience), Taylor will:

• Acknowledge the situation;
• Apologize for the experience;
• Invite the customer to fly again with Southwest;
• Many times include a gesture of goodwill (such as a ticket voucher); and
• Sometimes add a video that explains the situation.

Southwest's proactive communications team receives positive feedback on a daily basis. Customers commend the company for recognizing mistakes and apologizing for bad experiences. According to Taylor, 70 percent of Southwest customers who receive proactive communications return to the airline and bring others with them. "We create a wow factor…and a positive storytelling experience," he said.

Relevance:

In addition to driving home the point of the importance of transparency, Southwest Airlines’ personal approach to feedback sheds well-needed light on the topic of relevance. Recent research from Bain and Company further addresses and elucidates the concern of relevance. The study found that 80% of all brands believe their customers are engaging in the customer experience with the brand, while only 8% of the customers believe so.

A recent CMO Council study sheds light on why this may be happening. The study revealed that 63% of consumers have abandoned or are considering abandoning a brand altogether because of irrelevant emails and junk mail? What’s more, 54% of consumers indicated that a relationship defined by spam, irrelevance, and low value would result in their total disconnection from a program. In as much talk as we hear that the customer has control, I do not believe they want control as much as they want relevancy and communication in the manner that they, the consumer, want to receive it.

Today’s traveler is far more sophisticated than ever before. Considering that a recent Xerox study estimates the typical American consumer is bombarded with nearly 3,000 messages a day, we pay attention to 52 messages and we remember 4 according (Crista Caroni, the CMO of Xerox). It’s not surprising that travelers want your messages to be personalized, unique and engaging to stand above the growing media clutter. According to the CMO survey:

• 58% of consumers surveyed want more compelling and personal benefits and services
• 52% want more compelling personal deals and offers

Hospitality marketing professionals dedicated to delivering personalized communications with relevant offers and content will be the Loyalty Leaders. “Relevant” information is what guests want to hear – not the incessant sales pitches too many hoteliers deliver.

The online marketing strategy used by Eldorado Hotel Casino and Silver Legacy Resort Casino is a good example of how to engage travelers via relevant messaging. To better connect to their increasingly mobile audience while continuing to build loyalty and attract new customers, the casinos initiated a three-pronged messaging strategy.

Since they did not have a mobile subscriber list, the casinos included a mobile short code in their email newsletter. The call to action to receive the latest deals and promotions via SMS was well received, and a solid mobile opt-in list was generated. Armed with the list, they were able to create a targeted campaign focusing on current weather conditions. They developed a relevant offer for a $99 “ski and stay” package that included a discounted hotel room and lift tickets to nearby ski areas, along with other perks. This campaign had three simple steps:

• Timely-sensitive text message: To reach their mobile subscribers they sent a well-timed text message with embedded call-to-action, which read, “There’s a foot of fresh powder in the mountains & what better way to celebrate than a ski/snowboard package for $99! Call today, ski tomorrow.”
• Social media outreach: Three days after sending the text message, the casinos promoted the “ski and stay” message via Twitter and promoting it on the casinos’ Facebook page.
• Targeted, relevant email: The last step was to use email marketing to target their subscriber opt-in list. They repurposed messaging used in the social and mobile channels to drive increased marketing efficiencies. To extend reach, the casinos also added the social share button to its email message.

With this three-tiered, relevant-messaging approach, the casinos increased ROI by more than 1,000 percent. The casinos also sold 28 percent more “ski and stay” packages during this December 2009 marketing campaign than in the rest of 2009 combined. And overall, they were able to increase conversions by approximately five to eight percent.

As hotel marketers transition from the old school to new school marketing mindset, there are two words they need to keep top of mind: transparency and relevance. In today’s customer centric world, using data and actionable insight to be transparent and relevant is the key to driving sustainable behavioral change.

Mark Johnson is President and CEO of Loyalty 360 - The Loyalty Marketer’s Association. Loyalty 360 is the only organization that addresses the full spectrum of both customer and employee loyalty issues. An unbiased, market driven clearinghouse and think-tank for loyalty and engagement opportunities, insights, and responses, Loyalty 360 is the source business leaders trust for industry metrics, market driven research, case studies, and networking opportunities. A sought-after speaker and writer, Mr. Johnson is frequently called upon by media worldwide to share his expert insights into customer and employee loyalty issues. Mr. Johnson can be contacted at 513-290-5147 or markjohnson@loyalty360.org Extended Bio...

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