Loyalty program: Not Just Short-Term Behavior but Long-Term Relationship Management

The pressure to deliver growth has increased as the technology revolution has enabled marketers to link programs to real-time profit generation. As a result, CMOs are often forced to shift resources toward programs that deliver identifiable, immediate revenue. One of the core tools used:Loyalty program

Certainly, these programs may drive short-term results. But if not designed correctly, they can actually undermine the long-term health of the brand.

Loyalty programs are mainly psychological in nature, with little true interaction between the brand and the consumer. Still, they can go a long way toward making relationships concrete, as there is a back and forth between the consumer and the brand.

The typical loyalty program enables consumers to earn points that can be redeemed for rewards. When consumers' purchases are motivated by such promotions, we term that "behavioral loyalty." A form of loyalty exists because the consumer engages in repeat purchasing, but it's not clear whether it's because of the incentive or because they are really loyal to the brand.

Loyalty programs can shift what may have been a warm, emotional relationship into a cold, contractual relationship where consumers feel they are "owed" rewards.

A more valuable kind of loyalty

There does exist a more valuable type of loyalty: attitudinal loyalty, defined as when the customer has a strong emotional connection to and preference for the brand. Behavioral loyalty might be described as consumers doing what you want them to do, while attitudinal loyalty involves consumers believing what you want them to.
While attitudinal loyalty is a driver of behavioral loyalty, the converse may not be true. As a result, loyalty programs that provide only economic benefits may be appropriate in some instances but may actually conflict with brand-building efforts that ultimately attempt to create attitudinal loyalty.

This type of conflict can be seen in the airline industry's marketing efforts. Airlines have used slogans such as "Fly the friendly skies" and "Something special in the air" that try to establish the brands as friendly or luxurious. In contrast, the airline loyalty programs require that customers fly a great deal to get access to the improved, "friendlier" or more "special" service levels.
The airlines are left with two segments of customers. The first is those who feel they have "earned" and are therefore "owed" enhanced service, and although they demonstrate repeat buying behaviors, they're unlikely to have a true emotional attachment to the carrier and in the long run may easily move to a competitive brand. The second segment is those who have not "earned" anything, and are treated as second-class customers, so they are likely have neither behavioral nor attitudinal loyalty.

So what does it all mean? When designing a loyalty program, marketers need to move beyond focusing on just purchasing behavior and look at the impact of the program on overall brand health. While rewarding the right behaviors can lead to short-term revenue growth, designing loyalty programs so they also strengthen the brand perception can help lead to long-term brand equity.

Beyond the next purchase cycle
If every element of a loyalty program goes through a filter that evaluates it from the perspective of whether it will strengthen the consumer-brand relationship, the result will be a revenue-enhancing program that lasts longer than the next purchase cycle.
If an airline stands for superior care of the customer, can the loyalty program be designed to reward spending but also take care of the consumer and strengthen the brand? One answer might be to use a combination of fixed and flexible rewards. For example, the airline can keep the points-based program but also add customer benefits that are not explicitly mentioned. Unexpected rewards can have significant value as consumers view them as gestures on the part of the brand rather than payments that are owed.

Rewarding the right behavior means developing a structure that encourages the customer to shop more and spend more. This is obvious, and most programs are designed to effectively incent this in the short term. However, it's equally important to look at behavior on the margin and ensure that you don't accidentally "punish" a loyal customer.
In the current economy, with consumer spending down, it's very possible that many customers will not maintain the status they had in a specific program but will maintain or even grow their share of wallet with a specific retailer.
Most programs would punish those consumers for not maintaining their dollar spending even though they had maintained their share of wallet spending. Design for the best-case scenario, but make sure to design for alternative scenarios as well.

As stewards of not just the loyalty program but of the entire brand's health, CMOs have to rethink the design of these programs. Inciting short-term behavior is table stakes. The bigger challenge is moving beyond short-term efforts to design on-brand programs that can last beyond the immediate pressure. It may be a little harder to do, but it's the right thing to do.

Jeddah: Ikea store opening

Maybe it's time to cooperate, not compete

We tend to focus on our competitors and how to beat them. Take a moment to reflect on your potential 'cooperators' - brands that you could work with to strengthen your position in the market.

Maybe it's time to cooperate

Cooperate on product distribution
In 2008 Dunkin' Donuts partnered with J.M. Smucker to distribute a packaged coffee product to roughly 40,000 supermarkets and stores in the US. The result, US$115 million in sales. How can you cooperate with other brands to increase your distribution?

Cooperate on product design
One of my favorites: Italian sports brand Fila produced a line of Ferrari inspired footwear. This is just one of many examples of footwear brands cooperating with automotive brands to offer something extra. Levi's developed RedWire DLX jeans which feature an iPod dock and controller joystick built into the pockets. Which brands could you cooperate with on product design?

Cooperate to build your industry
Sometimes it makes sense to 'grow the pie' rather than compete for a slice. The WoolMark brand is a great example of this - promoting pure wool and all its benefits. The WoolMark brand helps to protect and grow the use of wool, as it competes with alternative fibers. Very useful if you work in the wool industry. How could you cooperate within your industry, to 'grow the pie'?

Cooperate on customer experience
When United Airlines began serving Starbucks coffee in-flight it gained passenger approval (and great PR too!), hotels use branded toiletries, cars use branded hifi, etc, etc. How can you cooperate with other brands to enhance your customer experience?

Brand cooperation can be very powerful, ask yourself:

Which brands can I cooperate with, and how, to strengthen my position in the market?

Rolls-Royce:::Phantom Launch

Challenge:

Rolls-Royce Motor Cars wanted to generate excitement and awareness with luxury lifestyle and business media in North America

Insight:
• Capitalize on limited tour of new Phantom EWB and 101EX Experimental Coupe to introduce the “new and invigorated” company
• Leverage upcoming vehicle introduction to demonstrate the performance, craftsmanship and luxury that has made Rolls-Royce the standard for excellence in any category
• Highlight features of U.K. headquarters to give journalists inside look at what makes Rolls-Royce special

Action:
• Arranged first-ever visit by U.S. journalists to Rolls-Royce corporate U.K. headquarters
• Created targeted media campaign aimed at luxury lifestyle publications and relevant national and regional press
•Spearheaded media relations in support of vehicles in select cities

Outcomes:
• Exclusive story with CNBC that set the broadcast strategy for Detroit Auto Show
• Features in luxury lifestyle publications including Celebrated Living, Palm Springs Life, POST USA and Malibu Times Magazine
• Lengthy local broadcast stories in select markets that were picked-up across the U.S.

DHL:::Taking on a Duopoly: The Deutche Post Formation of DHL in the U.S.

Challenge:

After acquiring 100 percent ownership of DHL Worldwide in 2000, Deutche Post World Net (DPWN) in 2003 purchased Airborne, Inc., and overnight became the third largest express delivery company in the U.S.

Restrictions on foreign ownership of U.S. airlines caused DPWN to spin off the airline portion of both DHL and Airborne.

ABX, Inc. and ASTAR, Inc. were two new independent airlines created by this transaction, and each would contract air lift to DHL’s express delivery ground operation.

The politically powerful U.S. express delivery duopoly of FedEx and UPS quickly reacted by inserting language into the Defense Appropriations bill that required the U.S. Department of Transportation to undertake a prolonged review of the ASTAR application for an airline operating certificate.

By requiring DOT to put the issue through an administrative law judge review, FedEx and UPS were able to use the public hearing process to generate negative press about DHL and DPWN, portraying them as the “German postal monopoly,” and effectively delayed DHL’s entry into the U.S. Our challenge was to not only counter the misinformation campaign being waged by FedEx and UPS in Washington, but also to boost public perception of the DHL brand as it attempted to gain foothold in the U.S. marketplace

Action:
• to develop a strategic communications plan to counter allegations from FedEx and UPS that DHL had an unfair trade advantage by being a subsidiary of the partially state-owned DPWN.

•We waged an education campaign to correct this misinformation through Hill briefings and media interviews, and maintained rapid response to negative media coverage.

•Additionally, designed an integrated marketing campaign to articulate DHL’s world-class expertise to the U.S. marketplace, introduce the company as the new challenger brand and infuse a spirit of competition and choice into the express delivery market.

•Specific strategies included:
–A 360º communications approach that leveraged the announcement of DHL’s $150 million investment in its advertising and marketing initiatives
–Defining the DHL brand to the U.S. business community and gaining credibility as a better option through an aggressive media relations campaign
–Launching a grassroots initiative to generate nationwide media interest in the “New DHL” while emphasizing the company’s U.S. heritage through local community outreach

Outcomes:

Ultimately, ASTAR and later ABX were certified and went on to provide air lift for DHL in the U.S. By actively engaging Capitol Hill and the media, we also were able to change perceptions of DHL and DPWN among the Washington audiences.

Further, we were able to eliminate the editorial descriptor “German postal monopoly” in coverage of DPWN and DHL.

The integrated marketing campaign was also a tremendous success, and the advertising effectively increased brand awareness by 12 percent following launch.

Public relations efforts supporting the brand launch generated approximately 69.7 million media impressions, including national media coverage on CNBC’s SquawkBox, The Today Show, Good Morning America and FOX & Friends and coverage in outlets such as: The Wall Street Journal, Dow Jones, Reuters, AdWeek, and Advertising Age.

The Week in Advertising Episode 21

Multisensory Media

Smelly Postage Stamps

Australia Post spokesman Noel Leahy said the stamp was a sensory explosion "sure to rekindle warm feelings for every romantic out there".
Mr Leahy said he hoped the initiative would encourage lovebirds to shy away from sending a less romantic email or SMS on February 14 this year.
"Sending an SMS or email doesn’t have the same impact as a card you choose personally and accompany with a hand-written message of love," he said in a statement.
"The value of a heartfelt love letter and scented stamp is priceless."

Smelly packaging shall enforce impulse purchases

The scent of chocolate is now being incorporated into a new packaging method with hopes that it will induce impulse purchasing in would-be consumers. ‘Chocolatine,’ as the product is being called, doesn’t have any specific product ties yet. At this stage, it’s basically a new style of glass capsule designed to emit fragrances and distribute them over long periods of time. The project combines technologies from Eastman Chemical Company, Eurofragance, Rotuba and EJ Pack.
Rotuba is responsible for the development of the jar lid that captures the fragrance of Chocolatine, which also has notes of vanilla and orange. In time, project developers say that the smelly packaging could be used to market products such as DVDs. Also, here’s a Chocolatine press release from EMG

A Commercial You Smell
Nivea was the first company to utilize scent to add a new dimension of realism to cinema advertising. As moviegoers watched a typical beach setting, the scent of suntan lotion filled the theater. The ad, ending with the line, “Nivea. The smell of summer.” engaged a sense that is always on. The scent tapped into people’s memory and invoked a psychological trigger that significantly increased the ad’s impact. Exit polls showed a 515% higher rate of recall compared to the same ad shown without the scent.

Collateral You Touch
In Portugal, 4,500 new cases of breast cancer are detected annually. Roche, the world’s largest cancer-treating drug company, is raising curiosity and generating awareness regarding the importance of self-exams using stress balls with a “lump” inside and the message: “You don’t see breast cancer. You feel it. Do the self-exam.” By physically squeezing the ball, women were shown what to look for and just how vital self-exams are. There program has inspired a 22% increase in mammograms and 28% in hospital visits

A Billboard You Taste
Instead of just talking about how good their chocolate tastes or showing an appealing visual, Thorntons Chocolate Company decided to actually let people try their product with an edible billboard. Thorntons created the world’s first chocolate billboard (just in time for Easter) consisting of ten massive chocolate bunnies, 72 giant chocolate eggs and 128 panels made of pure chocolate. People walking by were encouraged to sample pieces of the 860-lb. 14.5×9.5 foot billboard and have a literal taste of the product.

A Master’s Degree in Social Media

Next year, Birmingham City University in the UK will be offering a one-year master’s degree course in social media. Students will learn the ins and outs of social networking applications as public relations, communications and marketing tools.




Jon Hickman: MA in Social Media from Kasper Sorensen on Vimeo.

Designed to accessible to anyone, the course takes a scholarly look at services like Facebook, Twitter, Bebo and so on.Although learning the nuances of social media in the business world may have a place as part of a larger curriculum, it seems like too little to base an entire Master’s program on.
Early responses to the class have people scratching their heads at the relevance of a line of study that could essentially be completed for free by just getting hands-on experience with the social media tools out there.

Korean... Made in Amman

Wonho Chung monologue ...
Won-Ho Chung, a Korean born in Saudi and raised in Jordan

FP7 Doha::: forced to apologise after Jesus ad scandal

The ad has been called "an attack against Christian symbols", after it was published in the Lebanese newspaper Al Mostakbal last week.

Samsung had not commissioned FP7 to create any ad campaigns, and argued that the agency had only created the spot in order to pick up some honours at the recent Dubai Lynx Awards.

The investigation follows the publication of a damning entry on bloganubis, in which the legitimacy of FP7 Doha's work for clients Higeen Mouthwash, Samsung and Nissan was questioned.Steve Lane, festival director of the Dubai Lynx, confirmed that complaints had been received from numerous agencies as a result of the blog, as well as from clients.

Sunny Hwang, the president of Samsung Electronics Levant, said: "At no time was Samsung Electronics aware of these advertisements and the company has not approved or commissioned FP7 to create any advertising campaigns. "Samsung has the utmost respect for all cultures and religions and would never produce or approve the use of such culturally insensitive advertisements."At the award ceremony, FP7 picked up two golds and a silver for its Samsung work, as well as winning the agency of the year title.

The agency is now being investigated by the event's organisers, and is expected to be stripped of its honours. Phillip Thomas, the chief executive of Cannes Lions, the organiser of the Dubai Lynx Awards, said: "It appears in this case that FP7 Doha has knowingly tried to mislead ourselves and our jury regarding work they claimed to have created on behalf of Samsung Electronics, which in reality the client had never seen or approved."

Will FP7 change this page

Source: http://www.promoseven.com/

Perspective on thankfulness

Tim & Kristen Koehn talk about living and working in Kuwait and how that's affected their perspective on thankfulness