By Chris Reed, Regional Partnerships Director – Asia Pacific, Partnership Marketing Agency

Hasbro and online social game star Zynga have created a brand partnership to mesh the internet firm’s facebook hits with real-world products.

The agreement lets Hasbro develop toys and games based on the Zynga brand and will contain joint branding which will enable the wealthy Zynga to “share a common vision for play and a mission to connect the world through games,” …and make even more money by exploiting Facebook played games in the offline world.

Zynga games are free to play but the company makes money by selling virtual in-game goods to players and serving up advertising. Zynga rose to global popularity tailoring games for friends to play at leading online social network, Facebook, and is building its own online community for players.

Zynga bills itself as the world’s largest developer of social games and boasts more than 227 million monthly active users of its titles, which include FarmVille, CityVille, Mafia Wars, and Words With Friends. They have the top five games on Facebook of which they give 30% of all related sales to the social media giant – an ever increasing revenue stream for Facebook.

Hasbro clearly wants a piece of this action as they are so far behind in the in the online world, as they have missed various opportunities to create online gaming with their brand as dominant player.

The strategic alliance plays off both Hasbro’s and Zynga’s brand values, online meets offline, with Hasbro needing Zynga more. However, recent financial results from Zynga pointed to a slowing down of revenues coming from Facebook and with minimal mobile revenues, they clearly need to leverage their brand offline as well as online, and through mobile, to keep up with financial expectations.

Hasbro are a million miles away from realizing their social media and mobile potential compared to electronic gaming brands like EA Sports. Brand partnerships could definitely give them the lift they clearly need while giving Zynga offline credibility in the process.

Written by James Gaubert, Business Development Director, ICLP UK

Alarm bells should be ringing in technology vendors’ boardrooms as further disappointing high street sales figures point to more widespread economic difficulties. Technology vendors will not be immune from the downturn, but if they are to weather the storm they will need innovative and more effective tactics to support their mid-tier channel partners who are particularly vulnerable to fluctuations in SME spending.

Recent research conducted by CRN and UBM Channel Research, commissioned by ICLP, highlights shortcomings in many existing channel partner incentive schemes in the technology sector. The research focussed on five key roles within partner organisations (managing director, sales, marketing, technical and procurement) and looked at what they receive, want and value from their partner programme. Results indicate that a successful mid-tier partner programme depends on simplicity, consistency, good communication, more personal incentives and differentiation among recipients.

If vendors want at least to maintain sales, they need to re-evaluate their incentive programmes because nearly 90% of channel partners are not getting the rewards they want. And 82% of partners want vendors to be more dynamic with channel programmes. In short, vendors need to incentivise partners through channel programmes that are more generous and more attractive than their competitors’ schemes.

While many technology vendors already support their place in the market with incentives for loyal channel partners, there is a marked disconnect between what individuals in key partner roles actually receive and what they perceive as worthwhile incentives in the current economic climate.

Vendors who fail to address this mismatch risk losing market share and revenues as partners’ employees switch allegiances and promote competitors’ products instead.

Shortcomings in existing programmes

Overall, every role identified at mid-tier partner level is seeking a simple, consistent vendor partner programme offering valuable benefits with rewards they want, which are also easy to claim. The smaller mid-tier channel partners have limited resource means vendors need to appreciate that they only value those which can materially help them grow and run their business. Better supporting will be the key to increasing their share of the partner’s revenues.

If vendors are unable to provide dedicated partner managers for the mid-tier they should work closely with distributors who already have the resources, relationships and influence in place. The survey results show that the Managing Director role already perceives the distributor to be valuable and that over 85% of partners are likely to be influenced by distributor recommendations for vendor and product choice.

Shift from corporate to personal rewards

Generally, partners at all levels want a shift from corporate to personal rewards ­– reflecting individuals’ response to forced cutbacks on their personal spend because of the economic climate.

55% of respondents within a Sales role stated that they receive shopping vouchers as a reward from vendor partners but would prefer hotel accommodation, flights and dining experiences.

This is a stark contrast to those in a Technical role – whom would actually prefer to receive shopping vouchers rather than branded merchandise. Whilst ICLP appreciates that technical teams are often the toughest to influence, many vendors often overlook their potential to increase revenues.

In order to roll out a successful partner programme and maximise up-take, vendors may need to review the rewards currently on offer to ensure they are better aligned with the wants of the each recipient.

Programme benefits

The results demonstrated that regardless of role, it is acknowledged that the main benefits currently received by mid-tier partners are pre/post-sales support and education and enablement.

However when reviewing the benefits valued, there was clear distinction between each of the roles which clearly reflected their business priorities and potentially how their individual performance was measured.

76% of those in a Sales role claimed pre-sales support and education are currently the main benefits received however, rewards, evaluation and demo equipment, were listed as those most valued. Demo equipment is central to generating more end-user sales and where sales team are comfortable and familiar with the equipment, they are more likely to recommend it to the end user.

Marketing roles, being rewarded based on company performance, are evidently looking to generate new opportunities through strong leads for the sales team to convert. Vendors should look at ways of better supporting the marketing team with lead generation activities such as email campaigns, telemarketing, joint collateral development and presence at relevant exhibitions. This relatively minor change could forge stronger relationships between vendors and partners.

Procurement teams also see benefit in additional sales leads, which would increase orders and purchasing power – possibly even improving status from mid-tier to upper-tier partner.

Overall, technology vendors are not completely off-beam with their channel programmes, but in the current economic climate there is urgent need for them to improve delivery.

To learn more about how vendors and resellers get the most out of their channel programmes, click here to download our trend report.

Written by James Gaubert, Business Development Director, ICLP UK

Alarm bells should be ringing in technology vendors’ boardrooms as further disappointing high street sales figures point to more widespread economic difficulties. Technology vendors will not be immune from the downturn, but if they are to weather the storm they will need innovative and more effective tactics to support their mid-tier channel partners who are particularly vulnerable to fluctuations in SME spending.

Recent research conducted by CRN and UBM Channel Research, commissioned by ICLP, highlights shortcomings in many existing channel partner incentive schemes in the technology sector. The research focussed on five key roles within partner organisations (managing director, sales, marketing, technical and procurement) and looked at what they receive, want and value from their partner programme. Results indicate that a successful mid-tier partner programme depends on simplicity, consistency, good communication, more personal incentives and differentiation among recipients.

If vendors want at least to maintain sales, they need to re-evaluate their incentive programmes because nearly 90% of channel partners are not getting the rewards they want. And 82% of partners want vendors to be more dynamic with channel programmes. In short, vendors need to incentivise partners through channel programmes that are more generous and more attractive than their competitors’ schemes.

While many technology vendors already support their place in the market with incentives for loyal channel partners, there is a marked disconnect between what individuals in key partner roles actually receive and what they perceive as worthwhile incentives in the current economic climate.

Vendors who fail to address this mismatch risk losing market share and revenues as partners’ employees switch allegiances and promote competitors’ products instead.

Shortcomings in existing programmes

Overall, every role identified at mid-tier partner level is seeking a simple, consistent vendor partner programme offering valuable benefits with rewards they want, which are also easy to claim. The smaller mid-tier channel partners have limited resource means vendors need to appreciate that they only value those which can materially help them grow and run their business. Better supporting will be the key to increasing their share of the partner’s revenues.

If vendors are unable to provide dedicated partner managers for the mid-tier they should work closely with distributors who already have the resources, relationships and influence in place. The survey results show that the Managing Director role already perceives the distributor to be valuable and that over 85% of partners are likely to be influenced by distributor recommendations for vendor and product choice.

Shift from corporate to personal rewards

Generally, partners at all levels want a shift from corporate to personal rewards ­– reflecting individuals’ response to forced cutbacks on their personal spend because of the economic climate.

55% of respondents within a Sales role stated that they receive shopping vouchers as a reward from vendor partners but would prefer hotel accommodation, flights and dining experiences.

This is a stark contrast to those in a Technical role – whom would actually prefer to receive shopping vouchers rather than branded merchandise. Whilst ICLP appreciates that technical teams are often the toughest to influence, many vendors often overlook their potential to increase revenues.

In order to roll out a successful partner programme and maximise up-take, vendors may need to review the rewards currently on offer to ensure they are better aligned with the wants of the each recipient.

Programme benefits

The results demonstrated that regardless of role, it is acknowledged that the main benefits currently received by mid-tier partners are pre/post-sales support and education and enablement.

However when reviewing the benefits valued, there was clear distinction between each of the roles which clearly reflected their business priorities and potentially how their individual performance was measured.

76% of those in a Sales role claimed pre-sales support and education are currently the main benefits received however, rewards, evaluation and demo equipment, were listed as those most valued. Demo equipment is central to generating more end-user sales and where sales team are comfortable and familiar with the equipment, they are more likely to recommend it to the end user.

Marketing roles, being rewarded based on company performance, are evidently looking to generate new opportunities through strong leads for the sales team to convert. Vendors should look at ways of better supporting the marketing team with lead generation activities such as email campaigns, telemarketing, joint collateral development and presence at relevant exhibitions. This relatively minor change could forge stronger relationships between vendors and partners.

Procurement teams also see benefit in additional sales leads, which would increase orders and purchasing power – possibly even improving status from mid-tier to upper-tier partner.

Overall, technology vendors are not completely off-beam with their channel programmes, but in the current economic climate there is urgent need for them to improve delivery.

To learn how to drive increased revenue through your channel by influencing key roles, click here to download our trend report.

By James Gaubert, Business Development Director

Alarm bells should be ringing in technology vendors’ boardrooms as further disappointing high street sales figures point to more widespread economic difficulties. Technology vendors will not be immune from the downturn, but if they are to weather the storm they will need innovative and more effective tactics to support their mid-tier channel partners who are particularly vulnerable to fluctuations in SME spending.

Recent research conducted by CRN and UBM Channel Research, commissioned by ICLP, highlights shortcomings in many existing channel partner incentive schemes in the technology sector. The research focussed on five key roles within partner organisations (managing director, sales, marketing, technical and procurement) and looked at what they receive, want and value from their partner programme. Results indicate that a successful mid-tier partner programme depends on simplicity, consistency, good communication, more personal incentives and differentiation among recipients.

If vendors want at least to maintain sales, they need to re-evaluate their incentive programmes because nearly 90% of channel partners are not getting the rewards they want. And 82% of partners want vendors to be more dynamic with channel programmes. In short, vendors need to incentivise partners through channel programmes that are more generous and more attractive than their competitors’ schemes.

While many technology vendors already support their place in the market with incentives for loyal channel partners, there is a marked disconnect between what individuals in key partner roles actually receive and what they perceive as worthwhile incentives in the current economic climate.

Vendors who fail to address this mismatch risk losing market share and revenues as partners’ employees switch allegiances and promote competitors’ products instead.

Shortcomings in existing programmes

Overall, every role identified at mid-tier partner level is seeking a simple, consistent vendor partner programme offering valuable benefits with rewards they want, which are also easy to claim. The smaller mid-tier channel partners have limited resource means vendors need to appreciate that they only value those which can materially help them grow and run their business. Better supporting will be the key to increasing their share of the partner’s revenues.

If vendors are unable to provide dedicated partner managers for the mid-tier they should work closely with distributors who already have the resources, relationships and influence in place. The survey results show that the Managing Director role already perceives the distributor to be valuable and that over 85% of partners are likely to be influenced by distributor recommendations for vendor and product choice.

Shift from corporate to personal rewards

Generally, partners at all levels want a shift from corporate to personal rewards ­– reflecting individuals’ response to forced cutbacks on their personal spend because of the economic climate.

55% of respondents within a Sales role stated that they receive shopping vouchers as a reward from vendor partners but would prefer hotel accommodation, flights and dining experiences.

This is a stark contrast to those in a Technical role – whom would actually prefer to receive shopping vouchers rather than branded merchandise. Whilst ICLP appreciates that technical teams are often the toughest to influence, many vendors often overlook their potential to increase revenues.

In order to roll out a successful partner programme and maximise up-take, vendors may need to review the rewards currently on offer to ensure they are better aligned with the wants of the each recipient.

Programme benefits

The results demonstrated that regardless of role, it is acknowledged that the main benefits currently received by mid-tier partners are pre/post-sales support and education and enablement.

However when reviewing the benefits valued, there was clear distinction between each of the roles which clearly reflected their business priorities and potentially how their individual performance was measured.

76% of those in a Sales role claimed pre-sales support and education are currently the main benefits received however, rewards, evaluation and demo equipment, were listed as those most valued. Demo equipment is central to generating more end-user sales and where sales team are comfortable and familiar with the equipment, they are more likely to recommend it to the end user.

Marketing roles, being rewarded based on company performance, are evidently looking to generate new opportunities through strong leads for the sales team to convert. Vendors should look at ways of better supporting the marketing team with lead generation activities such as email campaigns, telemarketing, joint collateral development and presence at relevant exhibitions. This relatively minor change could forge stronger relationships between vendors and partners.

Procurement teams also see benefit in additional sales leads, which would increase orders and purchasing power – possibly even improving status from mid-tier to upper-tier partner.

Overall, technology vendors are not completely off-beam with their channel programmes, but in the current economic climate there is urgent need for them to improve delivery.

Phil Szymala, Business Insight Director ICLP UK

The recession has acted as somewhat of a catalyst for the rise of the discount retailer in the UK, a pattern seen in Germany over a decade ago. The 25% growth shown by Aldi in 2011 continues to provide just cause for the ‘Top 4’ grocery retailers to look over their shoulders, although a more modest 2011 for Lidl and Asda remind us that exponential growth cannot last forever.

Besides low price, another thing the likes of Asda, Morrisons, Aldi, Lidl, Ryanair and Easyjet all have in common is the lack of a customer loyalty programme.

The brazen position taken by Asda in defending its lack of loyalty programme (versus rivals Tesco and Sainsbury’s) offers the clearest insight into a perceived wisdom amongst many Discounters that loyalty programmes and low price retailing cannot co-exist. Indeed, Asda debates this so clinically it is as though it were an economist debating the fiscal relationship between interest rates and inflation.

But is the argument against investment in loyalty so simple?  Did Waitrose by the same token spend years not investing in a loyalty programme to invest in high quality instead, or is there a more complex debate to be had?

In Asda’s defence there is validity in highlighting the prohibitive costs inherent with traditional points programmes. If done correctly, this does represent a significant investment in technology and people, before even taking into account the cost of customer rewards, which with the onset of IFRIC 13 legislation also includes a significant amount of deferred points revenue which must sit on a company’s balance sheet as liability.

The value of points programmes to customers are regularly benchmarked online and in the media, by mostly focusing only on the spend/points/rewards ratio offered to customers. For example, Sainsbury’s, Superdrug and Tesco loyalty cards offer 1% money back on shopping whereas the incredibly popular Boots Advantage Card offers a generous 4%. What such benchmarking does not reveal, however, are the countless unpublished things Sainsbury’s, for example, do to enhance the customer experience by using the loyalty data to better serve deserving customers. This approach is allowing Sainsbury’s to be dynamic and focus its business operation around the customer on key decisions such as store formats, product ranges, merchandising and targeted coupons on products customers actually buy. Boots undertake some similar activities but simply cannot afford to action insight at the same level due to the investment otherwise tied up in giving such a generous 4% back to the customer. It could be argued that Sainsbury’s customers actually get more out of Nectar from easier shopping, inspiring ideas, relevant ranges and targeted offers (all data driven) than Boots Advantage Card achieves via it’s more linear customer reward focus.

The salient point here is that it is myopic to measure the value of loyalty programmes by simply focusing on the economics of points and prizes when so much other incremental value is there to be created from customer relationships. The concept Asda fails to grasp in its rationale for ‘non loyalty’ is that the true purpose of a loyalty programme is not simply to discount, it is to obtain rich customer data that will help you do a better job for customers, something both Janet Smith and Terry Leahy have been vocal about when articulating the strategy behind Tesco Clubcard.

The key to discounters believing in the argument for loyalty programmes must begin with a broad view of the value that CRM can deliver to their business.

Applying this logic somewhat actually vindicates both Ryanair and Easyjet for not having loyalty programmes (ignoring Ryanair’s prepay card) as it could be argued that their e-tailing model, backed up by a decent database, already provides the means to achieve all of the above (the extent to which they actually do use their customer data to create value is another debate). No such excuse exists, however, for low price retailers such as Morrisons, Asda and Lidl, surely it’s time for one of them to take all of their eggs out of their low price basket and step up to the mark with a compelling CRM strategy.

Undoubtedly significant financial barriers exist for discounters to create points programmes but who said that every loyalty programme had to be points based? The simple goal is customer data.

It is possible that Waitrose may be showing the Discounters how it might be done with their innovative introduction of the My Waitrose card, a non-points based loyalty proposition providing relevant offers and ideas to customers in exchange for the customer identifying themselves each time they shop. Time will tell whether this proposition becomes compelling enough for customers to carry a card, but it’s great to see Waitrose finally recognising the need for customer data and doing something about it in a manner befitting their brand, and with a fraction of the investment that would have been required for a points programme.

It does make this writer wonder how frustrating it must be for anyone operating in the CRM function of a large customer facing organisation to flourish in the absence of quality behavioural data, and how difficult it must be at a business level to provide sustainable relevance and differentiation without rich customer insight. Time and science moves on, 100m sprinters get faster, media becomes mobile and brands can no longer truly operate at the top of their game without data.

Without a long-term data strategy the tactical promotions offered by retailers, such as Morrison’s £1 saver stamps for £49 of shopping, become disposable as they offer no sense of permanent value. How refreshing it would be to see one of the discounters follow Waitrose’s lead by making more of an effort to engage customers in a relationship.

So if points and prizes are not the answer for discounters, what is?

Here are a few initial considerations for discounters thinking of embarking on CRM:

1. Customers care about value, not points
There are several ways to create customer value within a relationship:

Reward – discounts on things I want to buy

Recognition – benefits because of how I have transacted or interacted with you

Communication – inspire me with ideas, information, recommendations

Interaction – connect me to relevant people, value my opinion, validate my thinking

Operations – make it easier for me to do business with you

Waitrose have wrapped up elements of recognition and communication into My Waitrose which will provide them will a future platform to bring more value into their programme.

2. The goal is data

From the menu above discounters must ask themselves what value they can provide to customers so that customers will provide behavioural data in return i.e. identify themselves when they shop.

3 . Data is no good without an ability to do something with it

The right technical infrastructure to collect and analyse data is important as well as the ability to technically manage the relationship between customer behaviour and benefits provided in return.

4. It all starts with the right people and strategy

Having the tools is not good enough by itself. There needs to be a commitment in the business to using data to make business decisions to benefit the customer and then measuring the impact of the resulting activity. The goal should be for this culture to permeate the organisation. Price is one of many reasons a customer will visit a discounter, it should not be the whole strategic emphasis.

In summary

A rationalisation of Asda’s position against loyalty programmes could be that they are simply favouring an approach of focusing on price rather than making the best effort they could to learn about wider customer motivations. It’s simple, its single minded and successful to a point, but we need not look further than Tesco’s poor performance over Christmas 2011 as an example of where even a slight shift from customer engagement to discounting can take you. Sainsbury’s on the other hand have been widely heralded as the retailer who got it right by continuing to market value to customers in a broader way.

Incidentally, a 2010 survey commissioned by ICLP of over 1000 UK customers revealed a massive 47% would like to see Asda have a loyalty programme.

It could be argued that pure low price/promotional focus can only ever result in value erosion for brands and a race to the bottom. This is not to say that low price is not a valid strategy, indeed it clearly addresses a customer need. The point is that low price should not be seen as a substitute for seeking to better understand the customer and create wider value for them. In this day and age a non-data led approach to retailing is tantamount to a GCSE student seeking to pass his English Literature exam by reading someone else’s notes instead of the actual book. This approach will get you so far but you will miss out on realising true value. One might question whether such a focus on price over broader human connection is truly sustainable in the long term.

The logic of retailers such as Asda in highlighting the investment trade-off between loyalty and low price, is valid to a certain extent but primarily when considering traditional points programmes. Waitrose have tentatively shown more affordable avenues to CRM exist.

Currently there are no discount retail loyalty programmes in the UK. The dismissal of loyalty programmes by these retailers as being an expensive trade off to low price represents a narrow view. Could it be that this is simply being used as an excuse for not making an effort to better engage with customers?

With fantastic case studies such as Tesco Clubcard in the public domain, I am genuinely surprised that any retailer of importance today in the UK would not prioritise investment in some sort of data strategy, particularly during a recession where profitability and customer loyalty are so precious.

Following a period of concentrated growth, Discounters can now indeed class themselves as retailers of importance in the UK. So perhaps now is the time for some fresh thinking.

Written by: Alexander Meili, European Strategy Director, ICLP

Traditionally, telecommunication companies (telcos) have been focusing their customer lifecycle management in acquisition and churn prevention. Today, an increasing number of telco’s realise that price wars and tactical promotions only offer a temporary solution to churn. In short: we think the time is now right for loyalty programmes in this sector.

Own and 3^rd party research has shown that 30-40% of telcos have a loyalty programme in place, although regional differences apply (e.g. Americas: 60%, Europe: 25%). The same research has also shown that there is a growing trend to implement more advanced loyalty programmes (mainly with points-based schemes on spend and tenure).

Mobile telecommunications is probably the most competitive mass consumer market in the world. Today a large part of the population already owns a cell phone and subscribe to a mobile service provider. Due to its high saturation levels, the following challenges arise:

- How can you generate customer loyalty in a highly volatile and competitive market?
- How can telcos keep customers when the market primarily competes on price?

In terms of loyalty marketing, a mobile phone service provider must act on three different levels:

- Focus on keeping your current customers loyalty
- Increase usage of loyal customers through more value added services
- Gain new users

Designing a loyalty proposition for a mobile telco is different to other industry sectors. In particular the key is the difference between prepaid and the contract customers.

For the contract market, the challenge is to get the customer to subscribe to a contract for a given length of time – often up to 24 months. The ultimate goal is to keep the customer and have him to renew when the contracted period expires. Modern loyalty and rewards programmes are meant to prevent existing subscribers from cancelling their subscription with the company and switch to a competitor.

The other market we have to look at is the prepaid market (Pay As You Go – PAYG). Here, it is even more important to get customer loyalty because it’s a ‘throw away’ market. It is very easy to switch between operators resulting in an even more competitive market where customer can change network more often and are often influenced by friends and family.

Another industry specific peculiarity is seen when it comes to the type of loyalty rewards. ICLP’s online survey in the DACH region (April 2011) asked 500 consumers what kind of incentive they would expect from a mobile telco loyalty scheme. It highlighted that a majority of customers want service rewards, i.e. new handsets (32%), points (22%) and shopping vouchers (20%). The key to success lays in differentiation. As most providers are already delivering service rewards, they should be looking to differentiate in another way.

At ICLP, we suggest telco’s, and in particular mobile telco’s, should take the following approach to loyalty:

- Added-value benefits (e.g. bundled membership packages) – moving away from discounting = and making it harder for competitors to cost/benchmark
- Merchant-funded rewards and shopping platforms, with cash-back possibilities a customer is unable to get elsewhere
- Integrated social interaction with other customers (fun and engaging online platforms)
- Voice of the customer programmes (e.g. customer-help-customer forums)
- Currency-based programme schemes to increment ARPU and MOU (either through points or unique code marketing).

Not all loyalty activities are guaranteed to succeed. In the past, we have seen many telco’s with failed programmes due to lack of strategic planning and market testing: Orange Davantage, Swisscom Joker, Sprint Premier and T-Mobile Bonus – just to name a few.

In the mobile telecommunication market, there are many ways that ‘lead to Rome’ – some are more aggressive (benefits/rewards), others are more subtle (recognition) – however success depends on how you deliver the programme and the content of it.

Which mobile operators do you think have implemented successful loyalty programmes?

Phil Seward, ICLP’s General Manager for the Americas, tackles the controversial subject of offering discount coupons through a loyalty program.

Black Friday – the day after Thanksgiving – kicks off the traditional holiday shopping season and is the biggest day for retailers in the United States. If early indications are anything to go by, 2011 has seen a distinctive uptick with 227 million shoppers(1) spending an estimated $52.4 billion(2) over the four day weekend alone, representing a 6.6% year-on-year increase over the same period last year.

At the same time online spending is demonstrating even greater growth, including the best Cyber Monday (the Monday after Thanksgiving) results on record with $1.25 billion(3) in one day, with an equally high probability that total online sales for the holiday period will go on to break all records.

Increased consumer spending in an economic downturn

Whilst the general outlook for the US economy has deteriorated during 2011 as consumers continue to worry about rising unemployment, higher living costs and general tightening of the purse strings, the record-breaking figures above demonstrate that consumers are now bucking the economic trend and increasing their spending – including discretionary purchases such as jewelry, home décor, sporting goods and self-gifting – just so long as they are getting (or think they are getting) a great deal!

The influence of coupons, short-term offers and special discounts is bigger than ever in driving consumer spending – both offline and online – as savvy consumers seek out the best deals before parting with their hard earned cash. In fact the availability of coupons, deals and free shipping are considered the biggest influencers in the continued share shift from traditional bricks-and-mortar retailers to online merchants.

This consumer behavior is both indicative and symptomatic of an economic downtown, whereby even a brand’s most loyal customers can become more price-sensitive alongside the more hardened deal hunters. 

Discounts don’t drive loyalty      

There’s a common and often valid argument amongst loyalty professionals that discounts don’t drive loyalty. Coupons and discounts have traditionally been considered as more suited to driving acquisition than increasing customer loyalty and retention, since a brand’s loyal customers are precisely the ones that they shouldn’t need to provide discounts to.

This traditional view has been further enforced by questions raised over both the short term returns (to participating businesses) and the long term sustainability of online group-coupon sites such as Groupon, Living Social, Google Offers and the many carbon copies cropping up in the digital marketplace. Such sites run the risk of encouraging buying behaviors whereby consumers only purchase from businesses when they are offering significant discounts, and never when they don’t. These providers might enable a business to acquire new customers – albeit at a cost – but they do not provide a suitable foundation to engage with them, drive loyal behaviors and create long term, profitable relationships.

The opportunity for loyalty program operators

Loyalty program operators cannot ignore the proliferation and availability of coupons and discounts in the market today, however, but they can turn this renewed trend to their advantage by utilizing such techniques to reward customer loyalty rather than trying to create it. By using a loyalty program’s greatest asset – its customer data – program operators can create highly targeted coupons and offers to drive specific behaviors amongst their customer base.

For example this approach could take the form of a more traditional purchase-related discount proposition, whereby loyal customers can be targeted with exclusive offers to increase footfall or online traffic, but notably such targeted customers will have a higher propensity to generate incremental, higher margin spending during the same shopping visit. The offer can be extended further by enabling advance previews or early access (and therefore the best choice) to a program’s higher-tier members in recognition of their greater value.

Alternatively, established loyalty programs might equally use coupon tactics to drive redemption behavior amongst program participants, by targeting members with offers for spending their points on excess or distressed (core) inventory, or discounted redemption prices for non-core redemption options. Not only does this approach deliver enhanced member value through reduced redemption costs, but simultaneously creates additional member engagement along with a means to accelerate the reduction of program liability. 

The best brands don’t need coupons

Still not convinced that coupons have a valid role for the best brands? Then I’ll leave you with one final thought…

Despite having what might be regarded as one of the most loyal customer bases of modern times coupled with an equally enviable ability to generate unrivalled consumer demand for their products, even Apple offered a range of discount coupons for some of their most popular products on Black Friday – both in their retail stores and online – allegedly resulting in an all-time one-day sales record for the company.    

Coupon cutting is most definitely back in fashion, and is arguably with us for the foreseeable future.

(1) ShopperTrak

(2) National Retail Federation

By Mignon Buckingham, Managing Director

With the stagnating economy and increasing competition, what does the future of loyalty look like for global brands?

In the old world of loyalty, points and miles were the mainstay of any popular relationship programme – and to an extent this is still the case today with many brands finding it difficult to progress from outdated business models. Although clearly there is a place for reward propositions that include miles or points, in today’s digitally connected world, brands across all sectors need to evolve their loyalty strategies and raise their game or risk seeing their loyalty strategies become outdated and overlooked.

Brands risk losing vital customers if they fail to innovate and differentiate their offering over competitors. This could include embracing the complex, interconnected benefits of the evolving social media world. Customers already love and include online social communities in their everyday lives, so brands that understand how they can play a more significant role within their customer’s social community can create a much deeper emotional connection.

It should also include the multi-dimensional opportunities aligned with the mobile channel – now much more sophisticated than just SMS due to the proliferation of smartphones. Location-based marketing is now a vast opportunity for brands to engage with customers in a completely different way, capturing their interest at point of sale and further enhancing the customer experience.

Brands also need to focus on building more customer-centricity.  Online retailers like Amazon have, for example, introduced incredibly successful customer relationship techniques that harness the power of suggestion. Personalisation of the customer experience to encourage greater loyalty should be a key part of any brand’s future customer relationship strategy.

To this end brands need to initially look within their own organisations, as they already hold a vast amount of data and information on their customers. However the difficultly, and indeed the real trick, comes in how to make the creative leap from insight to innovation.

To see how ICLP have helped brands to innovate and deliver successful loyalty initiatives, take a look through our case study section.

By Stuart Evans, General Manager ICLP UK

It was stated in the press recently that members will attain the new status after earning 300 tier points or taking 25 flights, with benefits including premium check-in, advance seat selection and 25 per cent bonus Avios points.

This topic has sparked controversial comments from many industry leaders. Some interesting comments are mentioned below:

1. These benefits have little or no cost to British Airways (BA) – business class check-in and seat selection. There is possibly a small loss of revenue from those paying for seat selection, but it will likely be small.

2. Creating this tier has no impact on Oneworld relationships – which wouldn’t have been the case if it had been a new tier on the top.

3. Finally – by creating this new tier, BA rewards the “middle tier” or “middle tail” which is a sweet spot of loyal flyers who deserve to be rewarded.

Those at the top are already rewarded over and beyond Gold without the creation of another tier – with invisible benefits –  Goldtier members who earn way beyond the threshold tier points can get further benefits, such as upgrade vouchers, lounge passes for the Concorde room and so on.

The moves do make sense, and are clearly aimed at Euro Commuters – those people flying all the time within Europe on BA, buying relatively cheap tickets, but who find it difficult to earn the tier points and never get to Silver. It’s a way of offering something the low cost airlines don’t offer and the change has two big benefits for them – business class check in and seat selection.

In addition, operationally it allows them to be considered in the upgrade queue – where the airline needs to upgrade for commercial reasons, if you’ve upgraded your Gold and Silver card holders, you can now upgrade Bronze ahead of the less valuable  Blue card holders.

It would appear that the new Bronze tier will align with the existing Blue tier in terms of  Oneworld benefits, so nothing extra there.

Also, the tier thresholds for all levels are now being aligned globally so no longer will non-UK members of the programme benefit from lower entry qualifications. The changes also have another very positive effect for high flyers in their year of joining who are likely to progress beyond more than one elite tier.  Previously, each time you upgraded to the next tier your tier points were immediately zeroed. Now they remain cumulative until the end of your membership year.  The impact of this is that those going from zero to Gold in one year will need 600 fewer tier points than before to reach their goal.  This is because they will keep their original 600 points upon reaching Silver. Interestingly for those shoppers earning Avios points, the advantage of the new ways of redeeming the points – car hire and hotels, for instance, is that there were no taxes to pay on them, unlike flights.

What are your thoughts? Please leave your comments below.