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June 2018

Apple and the misty-eyed vision of retail's future

We hope that Angela Ahrendts is right about the customer and employee experience at Apple stores. They are wealthy enough to have very expensive stores that don't cover their cost in revenue. But we have to wonder if this model is fragile, and will be unsustainable when that perfect cultural alignment falls the least bit out-of-whack. 

Apple stores will not necessarily be a competitive advantage against Amazon. Amazon's physical retail will evolve quickly, and Apple will probably have to respond. 

Marketing Week: Apple’s Angela Ahrendts: Retail is not dying, but it has to evolve, 2018-Jun-20 by Charlotte Rogers

Describing stores as Apple’s “biggest product”, the senior vice-president for retail outlined a clear and compelling business case for physical retail during her session the Cannes Lions Festival today (20 June).... 

She sees physical stores as space for human experience, a reason why typically a third of square footage in all new Apple stores is dedicated to the delivery of the brand’s year-old education programme, Today at Apple.

“We’re not opening small stores, we’re taking the small stores and doubling or tripling the size of them to accommodate a forum and we’re only opening big stores in the future that can handle it,” she said.... 

Ahrendts describes her retail staff as “the secret sauce” that helps Apple stand out in a fiercely competitive market.... 

“They’re our ambassadors, they’re our greatest differentiator. This is something that Apple has that Amazon and Alibaba and nobody else has – people on the front line. And remember they’re hired to this day to enrich lives,” she explained.

“You’ve been to an Apple store, you feel that energy. The values at Apple, the values of the store teams, the loyalty and the tenure – it’s a culture that is so aligned...." 


Lego, BMW and other brands build loyalty with co-creation

When we work to generate and, even more importantly, accept ideas from our customers, we create bonds that last. 

Econsultancy: Lego to BMW: How brands have used co-creation to earn consumer trust, 2018-Jun-19 by Nikki Gilliland

...consumers are far more positive about a brand (and are more likely to promote it) if they can participate in the creation of its products.... co-creation can also allow brands to appear more caring and conscientious, and more likely to work towards social good....

Lego fans to post their own designs for new playsets, with the projects that receive over 10,000 votes then being considered for production. As well as the sheer joy that comes along with creating their own set, the winner also receives 1% of net sales, giving them a monetary incentive for participation too.... 

BMW is one automotive brand that has used co-creation to drive innovation. Its ‘Co-Creation Lab’ is a virtual community created way back in 2010 whereby consumers can offer their opinions on designs, submit their own ideas, and get involved in the creation process of vehicles.


Will Comcast be influenced by Sky's maverick loyalty program?

The tradition in the pay-TV industry is for providers to grow by dangling short-term offers at new subscribers. Existing customers usually see their rates spiraling upward over the years. Last year, Sky TV in Europe turned a new direction and began promoting better benefits available the longer customers continue to subscribe. It's important to note that these benefits do NOT include rate guarantees nor rebates. Instead, Sky bonuses their customers with experiential benefits, including upgraded broadband and VIP customer service. 

Now that Comcast is planning to buy Sky, we have to wonder if this program could spread to Comcast's U.S. customers. For now, the program is focused on reducing churn, but one day we could see them telling new prospects: switch and you'll begin accruing benefits over the years. 

Marketing Week: Sky steers clear of 'bribery tactics' as it targets 4.5 million loyalty members, 2018-Jun-13 by Ellen Hammett

1.8 million people have already signed up to Sky’s 10-month-old loyalty programme – which rewards tenure rather than spend – which launched last summer following complaints from existing customers that newer ones were getting better deals.

It was also an attempt to reduce churn amid growing competition from the likes of BT and Netflix, as well as to encourage more people to download the mobile app, which is where Sky VIP sits and one of Sky’s core metrics.

The loyalty scheme now accounts for 33% of the weekly traffic to the app, while Sky claims churn is at its lowest level ever having entered a fifth consecutive quarter of decline. Figures for the second half of 2017 reveal the number of customers leaving Sky fell from 11.6% at the end of 2016 to 11.2%.


Leveraging data for loyalty at Marriott

We know that Marriott is working with Salesforce to build the type of customer information platform they need. The investment will be substantial and re-training the employees will take quite a while, but it's essential. 

TechRepublic: Why Marriott's CEO worries more about Amazon and Facebook than Airbnb, 2018-June-13 by Matt Asay

I have Marriott's highest status within its loyalty program, yet the company still struggles to know very much about me.

For the past year, hotel employees have greeted me (and anyone else using the mobile check-in functionality) with "Hello, Mr. (insert mispronunciation of my name here). We've been expecting you." Except that it's clear they generally haven't been expecting me. And that they know very little about me. 

Amazon, by contrast, knows what books I read, the sorts of things I buy for my home, what I ask Alexa to do, etc. If Amazon were to partner with an Airbnb or similar, for example, it would be able to provide a much more satisfying stay, informed by data....

The sad irony is that I will gladly give a company like Marriott much more of my data if only they'll agree to use it to improve my travel experience. They don't, and this leaves an opening for the far less scrupulous digital giants to mine my data for their own benefit, not mine.



Loyal, healthy habits to be rewarded by the Dallas Mavericks

We heartily endorse brands that view loyalty as a customer habit to build instead of an incentive or promotion where loyalty is purchased. The Dallas Mavericks are partnering with a new blockchain-based company that rewards participants for meeting fitness challenges. These challenges are flashy, but if they lead to long-term loyalty to good habits at a fitness facility, it will be win-win-win for Lympo, the Mavericks and the customers. 

Press Release: Dallas Mavericks and Lympo app announce multi-year partnership to promote health and fitness tech, 2018-May-31

The Dallas Mavericks and Lympo, a blockchain app which motivates people to exercise and be healthy, are announcing today a multi-faceted partnership that includes a practice jersey patch and the renaming of all Mavs practice facilities. Later this year, the Mavericks and Lympo will unveil the rebranded Lympo Training Facility and the Lympo Training Court, as well as new practice jerseys featuring the Lympo logo. In this three-year deal, the partnership will also include the creation of a new Mavericks Fitness Team and future integration of Lympo cryptocurrency tokens in Mavericks blockchain initiatives, including an option to purchase tickets.

Lympo was founded in 2016 as a platform to encourage and incentivize healthy lifestyles across the globe. Lympo is developing a blockchain-based ecosystem that will integrate a community of users, personal trainers, gyms, fitness apps, wellness businesses and health insurers. Lympo also leverages the exploding popularity of wearable fitness devices to record activity and enables users to earn tokens for staying active.

“The Mavericks found clear alignment with Lympo’s mission to create a healthier world by utilizing the latest technology to encourage fitness and healthy living in a whole new way,” said Mark Cuban, owner of the Dallas Mavericks. “Through the platform, fans will be able to earn free tickets and merchandise by completing Mavericks fitness challenges on the Lympo app. We are eager to launch this fall.”


Ulta captures the frequent buyer with its loyalty program

Cosmetics are becoming a "super consumable" with enthusiastic shoppers buying more often and trading up to more expensive products as they enjoy the extensive customer service available at brick-and-mortar stores like Ulta. Ulta is also making sure the online channel is available in-store, enjoying major growth on mobile device orders. Finally, they have figured out how to leverage the gift-card connection, distributing gift cards to those retail racks we see in the grocery store. 

RIS News: Ulta Solves the Loyalty Puzzle, 2018-Jun-4 by Tim Denman

With over 28 million active users, Ulta has a massive opportunity to track, analyze, and gain actionable insight from its loyalty program. The retailer is investing in its AI capabilities in this key area to further personalize the experience for its shoppers.

Ulta is doing a great job converting casual shoppers into loyal brand fans, fueled in part by its exploding gift card business ― gift card sales increased 45% in Q1. In 2018, the retailer plans to add another 15,000 partner locations to sell its gift cards, a key initiative since the sale of the cards is “driving significant incremental sales and margin dollars,” Dillon says.

Quartz: The one retailer that Amazon can't seem to destroy is in cosmetics, 2018-May-28 by Helen Edwards & Dave Edwards

Ulta Beauty is described as “one of the best growth stories in retail” by UBS, which sets the market for beauty products and services at $139 billion in 2017 and growing. It is growing even as Amazon aggressively expands, powered by a combination of new store openings, exclusive product selection, and a successful loyalty program that supports e-commerce and prestige purchasing. The company also just cracked the Fortune 500 list, securing its place amongst the country’s most successful companies.

Refinery29: Ulta's Revamped Membership Program is a Beauty Lover's Dream, 2018-Jan-4 by Samantha Sasso

As far as loyalty programs go, Ulta Beauty's is among the best. If you're willing to cash in those catalog coupons every month, you might as well earn some moolah while spending half of your paycheck on mascara and luxe shampoo bottles.

Coresight Research: Beauty Loyalty Programs: Sephora Vs. Ulta, 2017-May-5

ULTAmate Rewards: Ulta’s Ultamate Rewards program features value-related rewards, such as points for discounts and extra points accrual for higher-tier members. Indeed, most of Ulta’s customers cite price and promotions as reasons they shop there, according to Prosper Insights Monthly Consumer Survey.