Walgreens builds loyalty by improving customer experience

The Walgreens "Balance Rewards" program is now 5 years old but stays on the leading edge of technology, creating innovative customer experiences such as "refill by scan" for the smartphone. They are doing an exceptional job of merging digital and in-store shopping, with over half their app users enjoying the app while in the store. In either the app or on the web site, customers can use "Pharmacy Chat" to maintain their relationship with their pharmacist. They also encourage employees to become users of the technology, getting faster and more sophisticated feedback on new features. 

"Balance Rewards" has 150 million registered members, of whom 85 million are active. That huge base makes it easier for them to perform testing by releasing features in stages. 

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How UGG is delivering an experience of gratitude in their loyalty program

Many of the least effective loyalty programs feel like a whip the brand is applying to get customers to buy more. The Great Loyalty Reset Report from 500 Friends/Merkle contains many fresh insights, but I find this insight about conveying a customer experience of 'gratitude' is the most compelling. How do we show our customers continuous gratitude? 

Loyalty 360: Most Consumers Focus Loyalty Program Attention on Five Retail Brands, 2017-Jul-6 by Jim Tierney interview of Sara Hogan, director, growth marketing, for Merkle Loyalty Solutions Group

Why is there such a disconnect between loyalty program managers and consumers?
Hogan: Fundamentally, I believe that brands see loyalty programs as a revenue generator and consumers see loyalty as a way for a brand to thank them for their business. This creates a significant disconnect. While the program manager has more consumer data available than ever before, meeting consumer expectations is becoming an increasing challenge.

From The Great Loyalty Reset 2017 report: 

Engaging with your customers is difficult if you don’t know who they are. Connecting with customers is incrementally more challenging if their purchases and brand interactions tend to occur only at limited times of the year.

At 400,000+ members strong, the UGG Rewards program is successfully addressing both challenges – and simultaneously positioning the iconic boot/fashion brand for a market increasingly influenced by younger consumers, social influence, online recommendations and built-in, seamless loyalty.... 

Today, the program not only enables and simplifies data collection, it rewards consumers for providing it. At sign-up, the rewards program now captures basic data about customers – name, age, location, mobile number, email and optional information, such as birth date.... They earn points when they sign up, link social media accounts, post on Twitter or Pinterest, create or share a wish list, or post an online review, for example. 

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Penney's new loyalty program shows the pressure of shopping behavior

While we would appreciate having the loyalty of our customers without paying attention to the competition, we have to admit our customers almost always know what our competition is doing. A study recently published by McKinsey & Company makes it clear: in women's clothing, 82% of purchases are shopping driven, not loyalty driven. Read more about shopping behavior in many categories. 

Dallas News: J.C. Penney tries to capture the best of Kohl's in new loyalty program, 2017-Jul-10  by Maria Halkias

The department store chain studied the hospitality and travel industries and its retail peers, while asking customers to rank features that were most important to them, said Sherina Smith, vice president of loyalty and customer relationship management.

"Customers didn't like having a limit on how many $10 rewards they can earn or that points expired," Smith said. "That's not a way to drive loyalty." Penney lifted a cap on the number of $10 rewards shoppers can earn in a month. Those rewards are good for 60 days. Members-only prices and shopping events have been added where shoppers can earn rewards faster.

Penney's rewards customers shop and spend more than twice as much as the retailer's other customers, and 66 percent of Penney's sales comes from rewards customers, Smith said. The goal also is to increase the number of Penney credit card holders, she said, which is now about 40 percent of its customers. In the new program, Penney credit card purchases earn twice the points of other types of payments. 

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Starbucks gifts cards keep on giving (to Starbucks)

If I liked Starbucks coffee, I'd have more success in using the stack of $5 Thank You gift cards I've received from companies. As it is, I'm just supporting Starbucks' bottom line unconsciously by letting them stack up. 

Independent retailers tend to resist the investment of turning branded gift cards into a loyalty program, but we need to do a better job of understanding the long-term financial benefits. 

The Motley Fool: These 3 Companies Earned $99 Million From Unused Gift Cards Last Year, 2017-Jul-15 by Jordan Wathen

Because credit card fees typically include a fixed-fee component that does not increase with the size of the transaction, Starbucks prefers its customers buy multi-use gift cards rather than making several smaller purchases with a credit card. For this reason, gift cards are an integral part of Starbucks' loyalty program. What it saves in processing fees can be used to incentivize repeat visits, a win-win for the world's largest coffee chain.

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Informal loyalty works at Four Seasons

A loyalty program can help obtain valuable information about your customers, but it's certainly not the only way. At Four Seasons, they have decided a rewards-oriented system is at odds with their culture, and since they pride themselves on recognizing their customers and remembering their preferences, I doubt they have suffered from the decision. If you plan to go forward without a loyalty program, you still have to educate your staff and provide an information system that helps them keep track of customer preferences. 

Skift: Why not having a formal travel loyalty program works--for some, 2017-Jul-10 by Deanna Ting

In the case of Four Seasons, Leff said that the lack of a formal rewards program doesn’t mean there’s no comprehensive customer relationship management strategy in place.

Four Seasons Hotels & Resorts President and CEO J. Allen Smith told Skift last year, when asked about the company’s loyalty strategy: “… Loyalty programs are defined by ‘I accumulate points and then I get something of value for that that I can redeem.’ Truthfully, that’s not what our customers are looking for. Our customer is looking for recognition: ‘Know who I am, and provide personalized services to me.'”

He added: “For our best customers, we know who they are and in many cases, we have, in effect, affiliated them with someone within Four Seasons that will facilitate their reservations in other properties, movement around the world, whatever the case may be. As they go from property to property, people will know who they are.”

The catch, however, is that if a company chooses not to have a formal loyalty program, it can be more challenging to collect customer data needed to personalize that guest or passenger experience. And having a formal loyalty program is not only low-cost but also often more effective in terms of gathering that data.

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Earned versus coercive loyalty

When we accept someone's authority over us, we know instinctively they expect us to be loyal. This type of loyalty becomes coercive if we expect punishment for being disloyal. Loyalty based on fear toward someone who has power over us probably needs a different name. 

Vox: The problem with Trump's idea of loyalty, explained by psychologists, 2017-Jun-8 by Julia Belluz and Brian Resnick

David DeSteno, a psychology professor as Northeastern, explained that there are a couple of methods people can use to build loyalty and trust.

One is, you meet someone, work with them, and learn about whether they’re going to have integrity and cooperate with you, DeSteno said. “Trust is a bet that a person is going to hold up his end of the bargain — accept some short-term cost for longer-term gain.”

Psychological studies show this pattern often holds in human relationships. We grant power to those who are empathetic, and those who look out for the greater good. A more Machiavellian approach works, too, but it can be off-putting. “People intuitively recoil against people who look as though they will exploit others, the social collective, and undermine the greater good,” Dacher Keltner, a UC Berkley psychologist who studies power, says. “I see Comey's actions as in part guided by this intuitive tendency.“

The other way to build trust is less effective: You demand or ask for it, as Trump does. This normally doesn’t work, except for in relationships with a power differential.

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Learn the competitive advantage of great CRM habits

In a recent issue of INC. magazine, Nicholas McGill gave a wonderful summary of great CRM habits. Even if you are a high-powered salesperson at a big company, you have to be maintaining your personal contact network, and these tips show the way. I have re-framed his points in my own language because I totally agree and I want to have them seared into my own brain. 

INC.: Managing Connections Is Now an Essential Life Skill. Step Up Your Hustle With These 7 Tips, 2017-May-16 by Nicholas McGill 

It may shock you that the linchpin to having more influential relationships rests not in some secret funnel app or technology but, rather, a deeper commitment to some basic fundamentals of contact management. These relationships are your opportunity farm. Maximizing your results often comes down to simply being a better steward than the rest of the crowd. So let's get to work. 

So here is my recap of Nicholas' wisdom:...   CRM to Save Your Life

  1. Get a good tool... Not Outlook or Gmail or Apple Contacts... because noting the activities is just as important as recording contact data. 
    1. You can keep it simple, like Streak for Gmail or Less Annoying CRM or Insightly... 
    2. Baseline: you must to be able to schedule a 'next task' every time you touch a contact, with a due date. 

  2. When collecting information, getting the name, and email or phone is NOT enough (and less is disastrous). If you can't get employer, title, interests or more, then at least write down where/when/why you met the person. 

  3. Prefer the personal email address and mobile phone if you can collect it. Business information is changing faster than ever. 

  4. Capture the story. Having a name with no context means making a 'cold call' later. 

  5. Watch for noteworthy tidbits. These will reawaken the spark. Better write them down ASAP because they fade SO fast. 

  6. Social media accounts rise and fall. When you first connect with someone on a social platform like LinkedIn or Facebook, you can probably collect their email address (which is probably a personal one), right after the connection is established. This will be crucial when their account lapses two years later. 

  7. Each time you meet the person IRL (in real life), update their record with details and personal anecdotes. Even if you don't reconnect for years, those memories will reawaken the connection. 

More from Nicholas McGill:

Every meeting reveals something new about the needs, interests and desires of one of your contacts. If a meeting doesn't, you are talking too much and asking too few questions. You should review and reflect on your meetings by jotting a few notes in your CRM.... 

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CRM as an innovation driver at Wyndham Hotels

Customer relationship management is not just about 'sales and service.' Great CRM programs drive innovation. 

Loyalty360: Deep Customer Research Pivotal Piece of Customer Loyalty Puzzle at Wyndham Rewards, 2017-May-11 by Jim Tierney

During a session titled, “Loyalty Revisited – A Retrospective Panel Discussion with Loyalty Expo “Alumni” at the recent Loyalty Expo, Noah Brodsky, senior vice president, worldwide loyalty and engagement at Wyndham Hotel Group, talked about the key factors that fuel the successful Wyndham Rewards loyalty program.

“There is more heated competition for the same customers,” Brodsky said. “We will see richer rewards. We rolled out new benefits for our best customers. It starts and ends with deep customer research...."

Customer research showed that a free night was the most important reward for members and, yet, that same research overwhelmingly showed that most felt that reward was out of reach.

With the new program, Wyndham introduced a flat redemption rate of just 15,000 points per night at any of its more than 8,000 hotels and, simultaneously, made it so that members earned a minimum 1,000 points with every stay.

Last month, Brodsky said that Wyndham views itself as a challenger brand and continues to push for innovation.

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Apple Pay steps further into the loyalty ecosystem

As a member of the Quizno's loyalty program, I can see the advantages of having Apple Pay. Quizo's has always been a low-end proponent of loyalty, and by pairing with Punchh and through them Apple, it gets access to more sophisticated features. We can watch the evolution of loyalty into being too complex for most businesses to own. 

9to5Mac: Apple Pay loyalty card support coming to Quiznos, Smashburger, and more restaurants, 2017-Jun-22 by Zac Hall

Punchh works with over 85 restaurant chains including Quiznos, Smashburger, Pieology, and Coffee Bean & Tea Leaf and announced plans today to bring Apple Pay-based loyalty card support to its client restaurant locations.

For participating restaurant brands, Apple Pay users will be prompted at checkout to add the restaurant’s loyalty program to their Apple Wallet. Once added, customers will automatically begin earning points and receiving specialized offers, which can be redeemed during future visits. Restaurant brands using the integrated solution will be able to match customers who have opted in to their loyalty program with their payments and receipts, know which menu items they purchased, and incentivize them to use Apple Pay.

Following today’s announcement, Punchh says customers will start seeing Apple Pay support for loyalty cards at participating restaurants “starting later this year.”

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Why Marriott is not worried about Airbnb

While Marriott recognizes Airbnb as a competitor, its current strategy is being driven by pressure from the online travel agencies. In general, Marriott serves a distinctly different market than Airbnb, although that could change. In the meantime, Marriott is looking toward expansion, operational excellence, and a booming loyalty program to cement its future. 

Fortune: Marriott: Why It's Expanding as It Fends Off Airbnb, 2017-Jun-14 by Shawn Tully

So far, Sorenson’s strategy of building scale is working. The OTAs’ share of bookings remains flat at around 8%, and more new hotels are signing with Marriott and other branded hoteliers than ever before. The combined rewards programs are growing faster than ever, says Marriott, at around 1 million new members a month. As long as those higher-margin direct bookings remain strong, Marriott’s owners will be happy and its business healthy.

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