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March 2018

What Accenture gets wrong about customer loyalty

Three Accenture consultants recently published an article on the Harvard Business Review's blog. We're relieved to see it hasn't been published in the magazine (so far) because it's a pretty blatant pitch for their services. Marketers Need to Stop Focusing on Loyalty and Start Thinking About Relevance, 2018-Mar-21 by John Zealley, Robert Wollan and Joshua Bellin

If your customer retention strategy relies on “buying” loyalty with rewards, rebates, or discounts, it is coming at a high cost. And these days, it could also mean that you’re giving up something priceless: your relevance.

That’s because the “loyalty era” of marketing, as we’ve known it, is waning. It was built in part on the notion that consumers will keep buying the same things from you if you have the right incentives. Yet, according to recent consumer research from Kantar Retail, 71% of consumers now claim that loyalty incentive-programs don’t make them loyal at all. Instead, in this new era of digital-based competition and customer control, people are increasingly buying because of a brand’s relevance to their needs in the moment.

We agree that marketers cannot afford to ignore "relevance," and we expect that some marketers go off the rails by focusing too narrowly on incentives to drive retention. Some of our favorite companies seem to be trying to buy our loyalty. (I'm looking at you, Kroger.) 

In order to be relevant, we have to BE loyal to our customers. That doesn't mean plastering them with rewards. It means understanding them and working to provide them with the products and services they need. CRM software helps us keep track of our full relationship with a customer, helping everyone in our company see a more rounded picture of the customer. Sometimes we see that customer has "aged out" or otherwise left the market our companies serve. Then our communications ought to turn from encouraging purchases to encouraging advocacy, or perhaps to humanely letting the relationship die. 

Accenture has a gimmick to help companies maintain their relevance with customers, by replacing the "four P's of tradition marketing--product, place, price and promotion" with "five P's: purpose, pride, partnership, protection and personalization." 

All the P's are useful in context, but none of them has much to do with loyalty. When care about our customers, use our listening skills, and evolve our products and services to improve their relevance and value to the customer, we create a loyal relationship. Which we must work to maintain. P's or no P's. 



How Target is responding to Amazon Prime and testing a new loyalty program

Although the Redcard program continues to be very successful, Target is experimenting with ways to compete more effectively with Amazon Prime. In our opinion, Target should push their community connections more strongly, countering Amazon's reputation for exploiting employees. 

Minnesota StarTribune: Target to test new loyalty program as Redcard growth has slowed, 2018-Mar-19 by Kavita Kumar growth of its branded debit and credit cards has plateaued, Target is exploring other ways to generate more loyalty at a time when online shopping has exposed consumers to many more places where they can shop.

Toward that end, the Minneapolis-based retailer next month will begin testing a new rewards program in the Dallas-Fort Worth area. The pilot program is called “Target Red” and, unlike Redcard, is not tied to a payment card.

“We know not everyone wants another credit card,” said Joshua Thomas, a Target spokesman. “So we want to find a way to grow our relationship and affinity with those guests.”

Shoppers who sign up for a free Target Red membership can use 1 percent of their purchase totals toward their next Target runs. Members can also waive the $5 fee for Target Restock, the next-day delivery service for household essentials and dry groceries. Members also will receive half off the first year of a $99 membership to Shipt to access Target’s new same-day delivery service.

Target Red members also will get to vote on which organizations Target should focus its charitable giving, a new twist on a now-defunct program previously connected to Redcard where shoppers could direct funds to the school of their choice. 


Facebook advises app developers to support their users to receive loyalty

Don't all of us install apps out of curiosity? Occasionally, we may have a job to accomplish, but often we just want to see what we "could get." Facebook recently studied the behavior of users in Australia, Indonesia, Malaysia, the Philippines, Singapore, and Thailand.  (I wonder if that sample was driven by consumer protection laws...). They found a big disconnect between downloading an app, using that app, and staying with that app over the long term. The conclusion for marketers: taking our customers for granted NEVER works. We have to learn about our customers and support them. 

 Facebook: Loyalty isn't over, it's now on demand, 2018-Jan-16

Find and reach your most valuable users.
Most app usage comes from heavy users. As such, growth opportunities lay not only in increasing user base, but also in boosting usage from existing app users. Know who your heavy users are by measuring how long they leave your app before they come back and re-engage them again within one to two months after their usage dips. Learn how to retarget heavy users with Facebook App Event Optimization and Value-Based Optimization.

Invest in always-on advertising.
Because an install does not always lead to in-app usage and purchase — and when it does, it is not always instant — it is crucial for marketers to improve engagement or re-engage a few days after install. Light users can drop off very easily, and most heavy users did not start heavy, so marketers should run ads targeting people who haven’t used the app in the first few weeks, not just the ones who convert the fastest.

Compete with yourself, not with competitors.
Users have a strong relationship with apps and, by extension, brands. Instead of focusing on stealing users from competitors and forcing exclusivity — which is likely to be happen as normal category app usage behavior — marketers should focus on creating a meaningful value-add for users who have downloaded and installed an app but have yet to make a purchase. 


How Rakuten plans to move its loyalty program to the blockchain

Our friends in the blockchain startup arena are always assuring us that loyalty programs will flourish with blockchain technology. Mostly, they are thinking that consumers will be able to trade their loyalty points outside the company's program, and we're not sure that will fly... 

More likely, in our opinion, companies in the future will leverage proprietary blockchains. Rakuten (Japan's Amazon-type company) has millions of people on its existing loyalty platform, and they will be offered a pretty painless and safe opportunity to experiment with Rakuten Coin. We think that running the existing and a new platform, then encouraging people to transfer, is a good strategy. We wouldn't risk our savings in a cryptocurrency, but we would risk our reward points. (At least once!)

Sourcing Journal: Are Cryptocurrency and Blockchain the New Look For Loyalty? 2018-Mar-1 by Jessica Binns

Rakuten, the Japanese company best known for its e-commerce marketplace, announced at Mobile World Congress (MWC) that it plans to roll its existing Rakuten Super Points loyalty program into one powered by blockchain, leveraging its 2016 acquisition of bitcoin wallet startup Bitnet to create the Rakuten Blockchain Lab and develop a new cryptocurrency: Rakuten Coin.

In the 15 years since the rewards program launched, Rakuten has issued $9 billion in Super Points, Rakuten CEO Hiroshi Mikitani said during a keynote speech at MWC. Notably, Rakuten is also the No. 1 fintech company in Japan.

The company sees the potential for cryptocurrency rewards to fuel the growth of cross-border shopping as it attracts new customers from around the globe to its many interests, which include Ebates in the U.S. and Priceminister, the second-most-trafficked e-commerce site in France. A “borderless” currency would eliminate many of the pain points that international online shoppers often encounter, such as prohibitive customs duties and costly conversion rates. Cryptocurrency could also become the norm across all of Rakuten’s many touch points.


Major League Baseball and Safelite Autoglass team up for customers

Agility in marketing is about scanning the environment for meaningful ways to support customers and to newsjack events. Safelite has figured out a charming way to do it. 

Loyalty360: Impact of Emotions on Customer Preference, Brand Loyalty at Safelite AutoGlass, 2017-Dec-29, Interview of Renee Cacchillo, Safelite SVP of Customer, Brand and Technology by Jim Tierney

...the marketing team was tasked with finding ways to build meaningful connections with customers. We’re doing that by identifying passion points and appealing to consumers’ emotions–whether it’s humor, love, or empathy.... 

We’re finding sports to be a real passion point for customers that allow us to see a halo effect. One example is a partnership with during Spring Training.

The official Twitter page for MLB (@MLB) is letting fans know that if their windshield falls victim during spring training games or batting practice, mentioning the @Safelite Twitter handle will get a Safelite AutoGlass technician on site ASAP to fix it. The deal also includes co-branded trivia questions for fans on Twitter.

The partnership actually stemmed from a relationship started last February when a fan’s windshield was hit by a spring training home run. After sharing photos and social buzz on Twitter, Safelite AutoGlass stepped up to replace the fan’s windshield at no charge. 


So, it seems that partnering with the MLB is a very natural fit for our business to grow our brand awareness and build preference.

Kohl's is staying close to the customer in more ways than one

Kohl's provides an excellent example of operating the whole business being 'customer-centric.' That's how we stay close to our customers. 

DC Velocity: Kohl's fights back--with its stores, 2018-Feb-27, Interview of COO Sona Chawla by David Maloney

Kohl's is leveraging its stores for direct-to-customer distribution as they now operate as mini-fulfillment centers to handle online orders.

Kohl's stores currently perform 32 percent of its online fulfillment, according to Chawla. On "Cyber Monday," the stores collectively did three times the fulfillment volume of its traditional e-commerce channels, she said.

A key factor for the strategy is that stores shorten the distance to customers, Chawla said. Delivery from stores is 25 percent faster than filling an e-commerce order from a distribution center, she said.

Kohl's has increased its store traffic by encouraging in-store pickups, where customers order online but come into the stores to pick up their merchandise. Chawla says that 90 percent of online customers also shop in Kohl's stores. Incentives, such as the Kohl's Cash discount loyalty programs, also help to keep customers coming back. 

Another strategy has been to break down silos between its operational teams, Chawla said. Managers now work together to make adjustments and tradeoffs, rather than just ensuring their own areas are optimized at the expense of others, she said.


Facebook is our canary in the coal mine (in America) for GDPR (the new rules for collecting customer data in the European Union)

One of my clients has many contacts and customers in Europe, so we send email newsletters and maintain contact records that are subject to the new General Data Protection Regulation of the EU. (Despite Brexit, the UK has decided--wisely--to comply with GDPR for the foreseeable future.) 

If you haven't heard about GDPR... here's a resource to bring you up-to-date:

Technically, GDPR only affects companies who have customers and prospects in the European Union (+ the U.K.). However, many people predict that GDPR will become the 'gold standard' for protection of customer data. Despite the fact it may not solve future data piracy problems! 

In terms of deciding how to implement GDPR requirements, we in the U.S. may find it valuable to look at Facebooks' very public struggle to comply... 

Econsltancy has some very helpful information, including this free post. Plus GDPR training for Econsultancy subscribers. 

My point is that GDPR will probably affect your CRM and/or loyalty strategy in the future, and you need to start learning to understand it.