By Judy Melanson
The Mobile Wallet is a hot topic for those in the retail, technology and financial services industries. As you may know, mobile wallets allow customers to pay at store checkouts with a tap or wave of their smartphones. In our recent Consumer Pulse study of 1,500 smartphone users, we learned that half are unaware of Mobile Wallets.
To drive adoption, retailers and technology providers will need to overcome a lack of awareness and fear of new technology, all while offering a clear advantage over more traditional payment methods. As shown below, loyalty programs provide a key leverage point to drive Mobile Wallet adoption.
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Download our latest report on the Barriers and Opportunities for Mobile Wallet and learn more about what will drive (and block) adoption, and who has the advantage as we enter the next leg of the mobile wallet race.
Judy is VP of CMB's Travel & Entertainment practice and loves collaborating with clients on driving customer loyalty. She's the mom of two teens and the wife of an oyster farmer. Follow Judy on Twitter at @Judy_LC
By Judy Melanson
Originally published on Loyalty 360
I love New Year’s Resolutions! Every December, I enjoy reflecting on what I’ve learned in the last 12 months, and set goals to grow professionally and personally. On my list again this year, is studying opportunities to drive customer engagement—understanding how companies in the travel and hospitality industries can use new techniques and technologies to drive loyalty and ultimately profits.
Every two years, Marketing Science Institute (MSI), a think-tank bridging academic theory and business practice, reaches out to thought leaders to set its priorities for upcoming research and conferences. MSI’s “Priority Topic” list reflects marketing’s key challenges and opportunities (see the full list here). Topics include: Big Data; insight into people as consumers; rethinking the journey to purchase (and beyond); and mobile’s impact on how people live their lives.
If you were to improve your organization’s effectiveness in any of these areas, chances are good you will increase your customer’s engagement and loyalty. My “2013 professional resolution” is to share learnings about each of these Priority Topics.
Today, let’s tackle Big Data: leveraging the customer and market information available to drive business results. Although the topic of Big Data is just that— “Big,” the reality is when you break it down into small steps you can begin to drive customer engagement with data you already have on hand.
Big Data: The promise and the pitfalls
As computers and cell phones play an increasingly important role in consumers’ daily activities, mountains of data are collected and stored by travel and hospitality companies. From customer transactional (e.g., bookings, loyalty program redemptions, web site visits, call center logs) to interactional data (e.g., posts on Facebook) and observational data (e.g., networked sensors in cellphones or cars), the amount of data available for analysis is immense and expanding daily.
When it comes down to it, Big Data is useful only as we are able to glean useful business intelligence from all this data. The true value of Big Data (or any data for that matter) is not in the bits and bytes but in using the knowledge gained to help you make better decisions—to reduce the chances of making a bad decision and to help you “sleep better at night.” Companies can leverage big data in a number of ways including product and service development, process improvements, and revenue management.
Some companies who’ve found success with Big Data engagements (outside of travel and hospitality) include:
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Amazon.com, eBay, and Google continuously test factors—from where to place buttons on a Web page to the sequence of content displayed—to determine what will increase sales and user engagement.
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Capital One continues to refine its methods for segmenting credit card customers and for tailoring products to individual risk profiles. According to Nigel Morris, one of Capital One’s cofounders, the company’s multifunctional teams of financial analysts, IT specialists, and marketers conduct more than 65,000 tests each year, experimenting with combinations of market segments and new products.
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The online grocer Fresh Direct adjusts prices and promotions daily (or even more frequently) based on data feeds from online transactions, visits by consumers to its website, and customer service interactions.
The pitfalls:
Quantum physics might be easier to explain than Big Data and brain surgery might be easier to do! Not only do you need to conceptualize the plan, structure the data, acquire the software and/or analysis tools but then you need to do the analysis. This is hard to get your head around!
Big Data exercises to predict customer behavior have been met with limited success. Netflix offered a $1 Million prize to the firm that could improve its movie selection algorithm by just 10%. Three years later, a group managed to create a model using available data however the formula was too complicated for Netflix to implement. If you haven’t read it yet take a few minutes to check out this HBR post that talks about the challenge of modeling consumer behavior: Big Data Hype (and reality).
Big Data: Baby steps
Here are some practical ideas for you to begin to look to incorporate some ‘Big Data’ activities into your 2013 plans:
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Link financial data to your customer satisfaction. Understand the monetary value (in the short and long-term) of a satisfied guest to make informed decisions on investments and initiatives.
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Build bridges between different data sources. First, use the same categories to code responses in your customer satisfaction study, social media analytics and your call center. Second, ensure a person is tagged with the same identifier in all data sources so you can look at a customer’s responses across the silos of your organization.
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What? So What? Now what? Start your quest for decision-support with the end in mind. Get agreement on the “Essential Question” you are looking to address, and identify the supporting information (from all relevant sources) you need to support your recommendations. Make sure your recommendations answer the question: Now what action should I take?
We see a bright future for travel clients in using Big Data for building engagement and loyalty. Develop a plan to answer your Essential Questions and, then you will be in a better position to practically analyze the right data from the right data sources – applying a laser-like focus on the problem you are trying to solve.
How will you use Big Data (or any data for that matter) to drive customer engagement and loyalty in 2013?
Judy is VP of CMB's Travel & Entertainment practice and loves collaborating with clients on driving customer loyalty. She's the mom of two teens and the wife of an oyster farmer. Follow Judy on Twitter at @Judy_LC
You have a loyalty program, you offer discounts, special rewards, and you track your growth.
Well so does everyone else.
Judy Melanson shares tips for optimizing your loyalty program so you can break away from the pack, and make the most of your loyalty investment.
Read more about our work with loyalty programs here.
After spending the last few days at Loyalty Expo in Orlando I heard no shortage of different points of view on the future of loyalty and loyalty programs. From conversations around NPS scores and measures to a great panel discussion on the Socialization of Loyalty run by CMB’s Judy Melanson (@Judy_LC), there’s never been a more exciting time to tap into this topic, and never been more opportunities to create stronger and deeper connections between your brand and your customers.
For me one thing remains clear, points and rewards, while very important, are about transactional marketing, where as true loyalty runs much deeper and is harder to come by. It takes a different approach to create this kind of connection and penetration into your customer’s rituals. It is a deeper commitment to the brand regardless of what one gets in return.
Think of brands you go out of your way for or even pay more for. I think of Dunkin' Donuts; I am a Dunkin’ fan through and through, as is my husband. When he travels the first thing he does is go online to see where the closest Dunkin' Donuts is. He even picks his hotel based on the proximity to a Dunkin' Donuts. Why? We run on Dunkin'. It is part of our morning ritual, it has become habit. That kind of loyalty runs deep, and it’s driven by behavior and brand preference rather that points and rewards.
One of my favorite presentations from Loyalty Expo talked a lot about creating this kind of connection. It was from Michael Grasso of TXU Energy (@TXUEnergy) and Zain Raj (@Zain_raj) of Hyper Marketing. They presented a great case study on TXU Energy’s use of behavioral marketing to create that deeper connection and brand ritual in a very competitive commoditized market. Hey-if an electric company can do this so can you! In their presentation they outlined these four steps to create a Brand Ritual:
1. Getting the first transaction: Everyone has to start somewhere. The first step is to understand the value equation has changed. Zain says the new value equation is:
Product features + Customer Service+ Added Value
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Competitive Price
2. Invite customers into your brand: I think a great example of this is personalized gift cards. Putting a picture on a gift card makes it much harder to throw away and increases the likelihood of reloading the card.
3. Building connections with relevant experiences and innovations: TXU created online and mobile tools to educate their customers about not only how much electricity they used, but ways they can save money on their bill. This move led to the last key to building Brand Ritual for TXU.
4. Align with key values: TXU understands the values that are close to the hearts and wallets of their customers. They created a feeling of partnership by aligning themselves with their customers' values.
As marketers and researchers there has never been a better time to tap into the behavior of our customers, align with their values, and connect with their emotions to create a deeper, richer and more meaningful connection and become a ritual.
Posted by Kristen Garvey. Kristen is CMB's VP of Marketing, a mom of two, and the top three brands that have won her heart and wallet are Dunkin’ Donuts, Jet Blue, and Apple. Follow her on Twitter: @KristenGarvey
Customer feedback is a popular topic these days, and it makes me think about my own experiences and how companies’ responses continue to shape my perceptions. I might have ongoing positive experiences with a company, which, clearly, results in fairly positive perceptions. So what about when I have a negative experience? What then?
Recently I had a really good customer service experience that resulted from giving some pretty negative feedback. I purchased a laptop bag at what I felt was a reasonably high price, but I loved the bag so it was worth it to me. Imagine my disappointment when after only 2.5 months, it broke (under very normal wear and tear). Imagine my further disappointment when I found out that the warranty was only good for 60 days… I was so frustrated! So I thought about it, and decided to write to the company. I politely explained the situation, acknowledged that the warranty was expired, and told them my goal was really just to communicate the issue and my disappointment—I paid good money for a bad product, and I really hoped that they would strive to develop a better quality product in the future.
To my (very pleasant) surprise, not only did I receive an apologetic response, but they also acknowledged some recent manufacturing issues they had recognized due to ongoing customer feedback. The company had actually decided to change manufacturers to address the problems customers were facing. That response alone would have been sufficient for me…they were proactively addressing the problem. But then, in addition, they offered to replace my laptop bag once the shipments arrived from the new manufacturer. A great bonus!
The more I thought about it, the more I realized what this company did right and what stood out:
- They responded
- They used manners (thanked me for my business, apologized for the problem, etc.)
- They offered a resolution
I realized how much of an impact those three little things had on me. I felt really good about the service I received and, despite the problems I experienced, felt better about the company I was working with. At the end of the day, I was ultimately less focused on the problem I had experienced and more focused on the resolution… knowing that this company was listening to their customers, and acting on the issues. Their actions made me want to continue purchasing from them and supporting their products.
What it comes down to is that companies are, at the core, human… product development, customer service, and all the other pieces of the companies we love (and sometimes hate) are human, and they do make mistakes. What matters is what they do about it. So what good is my customer feedback? In this case, it’s what is keeping me loyal.
Posted by Dana Vaille. Dana is a Senior Project Manager with CMB's Financial Services & Insurance practice.
For more on our Customer Satisfaction and Loyalty offerings click here.
On a recent 5-hour drive with my son Pete, his iPhone’s GPS-app suddenly started “cha-chinging” up points. He didn’t know why the points were rolling in, nor did he have any idea how – or for what – or if he would ever redeem these points, but we both agreed: “Points are good.”
Nearly everyone, not just Pete and me, is hardwired to enjoy games. "Gamification," the use of game mechanics in nongame settings, takes advantage of our psychological predisposition to enjoy games, and encourages people to engage in tasks that, but for the game, they might not feel compelled to do. Traditional customer loyalty programs leverage game mechanics: we earn points, achieve status/levels, display badges of honors and chase bonus points. And, clearly, these mechanics help to increase consumers’ motivations and positively shape their behavior, leading to positive revenue impact for the associated brands.
Lately it seems that game concepts are cropping up in more – and some unexpected - places. Part of the reason for the recent popularity is the growth in social media, a channel that was born to be gamified. Twitter has been game-like from the beginning, with the main score being the number of followers. Foursquare, with its hundreds of badges to win, is basically a game….it isn’t used, it’s played.
But after reading about social loyalty programs, where members earn reward points for promoting brands on social networks, I’m wondering if marketers are taking things a bit too far. Does rewarding customers for forwarding a brand-related tweet water down the strength of true loyalty?
If this term is new to you, let me tell you what I’ve been seeing: Social loyalty programs are promoted as taking the concept of traditional loyalty programs to the next level by enabling companies to track and reward their fans, followers and customers for a wide variety of online and social activities -- from tweeting a message to checking in to a location or liking a post on Facebook. Companies like CrowdTwist, a New York start-up (that recently received $6 million in venture funding) tracks and rewards customer behavior across social, mobile and online platforms.
Maybe social loyalty programs are the future – but before building a social loyalty and/or changing your current loyalty program, I’d suggest you consider these questions:
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Where’s the beef? Traditional loyalty programs are built on the principle of rewarding customers for behavior of value. The programs we work with can articulate the value of their members and of their program—the incremental sales, flights, stays, or bookings that they may not have generated otherwise. What economic value will a social loyalty program provide to a brand? What behaviors will you look to encourage? Will a program encouraging social behaviors deliver desired outcomes? The value of the activities must be calculated – in terms that the CFO will understand and believe.
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What other (non-economic) value can a socially loyal member provide? What benefit to your brand is more fans or higher klout? Can your increased social-WOM, be connected to increased sales? Or insulate your brand from negative reviews? The CFO might have a harder time articulating the value of these activities – but they’re important to consider.
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Finally, to whom would a social loyalty program appeal? Segmentation research we ran a few years ago found that in a traditional loyalty program, the portion of members whose primary motivation was to “play the game” (e.g., seek out bonus points, enter contests) represented a fairly small portion of members. But these Game Players – or Social Loyalty members - may be a desired demographic with untapped potential for your brand.
So, before spinning the dial, understand your different customer groups and their associated motivations. Explore, for which segments, a social loyalty program would be beneficial in shaping customer behavior to yield positive business results. As with all things “social,” gamification and social loyalty are tools in the toolbox to build customer engagement. Understanding if, when, where and how they fit into your current loyalty programs and strategies is the most exciting part.
Posted by Judy Melanson. Judy leads the Travel & Entertainment practice and loves collaborating with clients on driving customer loyalty. She's the mom of two teens and the wife of an oyster farmer. Follow Judy on Twitter at @Judy_LC
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