Today’s blog post was written by our summer intern, Wassa Suttiwiriya. Wassa is an Economics and Math student at the University of Southern California.
With the growth of the computer and video game industry, it is no surprise that the sector’s consumer base has diversified and expanded to a great extent. Who are the key players of computer and video games? What types of games do they want? The 2013 Essential Facts About the Computer and Video Game Industry, authored by the Entertainment Software Association, reveals statistics on consumer demographics and trends.
The best- selling video games are action, shooter, and sport games, and the best-selling computer games are role-playing, casual, and strategy games. Gamers say the top reasons they purchase a game are the quality of the graphics, an interesting storyline, a sequel to a favourite game, and word of mouth.
The 2013 Essential Facts About the Computer and Video Game Industry is the most in-depth and targeted survey of its kind, gathering data from more than 2,000 nationally representative households.
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by Kendal Peiguss.
According to Inc., it costs a business about 5-10 times more to acquire a new customer than it does to sell to an existing one — and on average those current customers of yours spend 67% more than a new one. So, what are you doing to keep your customers coming back to your business? If you’re like 65% of marketers, your company has implemented a loyalty program. But is it working? According to the 2011 Colloquy Customer Loyalty Census, of the $48 billion worth of perceived value in reward points and miles distributed by American businesses annually, one-third goes unredeemed by consumers. Companies lose money on time and effort, and customers get no more value from the businesses to which they are “loyal.”
So how do you keep your business out of that one-third segment? How do you convey enough additional value in your programs to keep your customers coming back? It’s time for marketers to look beyond convoluted rewards systems and offer actual value to customers using their loyalty program. To get you started, here are some ideas for customer loyalty programs that might work for your business.
This is the most common loyalty program methodology. Frequent customers earn points, which translate into some type of reward. Whether it’s a discount, a freebie, or special customer treatment, customers work toward a certain amount of points to redeem their reward. Where many companies falter in this method, however, is making the relationship between points and tangible rewards complex and confusing. Fourteen points equals one dollar, and twenty dollars earns 50% off your next purchase in April! That’s not rewarding, that’s a headache. If you opt for a points-based loyalty program, keep the conversions simple and intuitive.
One example of a company using a points-based loyalty program well is Boloco. They speak the language of their audience by measuring points in dollars, and rewards in food items. Customers swipe their stylish Boloco card at every purchase and the card tracks the amount of money spent. Every $50 spent earns the customer a free item. Doesn’t matter if they choose a super jumbo burrito or an extra small smoothie – it’s free after $50. This is an example of a company simplifying points with an accessible customer reward system.
Although a points system is perhaps the most common form of loyalty programs, it isn’t applicable to all business types — this type of loyalty program is most appropriate for businesses that encourage frequent, short-term purchases.
Finding a balance between attainable and desirable rewards is a challenge for most companies designing loyalty programs. One way to combat this is to implement a tiered system. Offer small rewards as a base offering for being a part of the program, and encourage repeat customers by increasing the value of the rewards as the customer moves up the loyalty ladder. This helps solve the problem of members forgetting about their points and never redeeming them because the time between purchase and gratification is too long.
Virgin Airlines’ Flying Club inducts members at the Club Red tier, then bumps them up through Club Silver and Club Gold. Club Red members earn miles on flights and get discounts on rental cars and hotels. Club Silver members earn 50% more points on flights, expedited check-in, and priority stand-by seating. Club Gold members get double miles, priority boarding, and access to exclusive clubhouses where they can grab a drink or get a massage before their flight. The key is to offer benefits in the early stages to hook the customer into coming back. Once they do, they’ll realize that “gold” status isn’t unattainable, and offers really cool benefits.
The difference between points and tiered systems is that customers extract short-term versus long-term value from the loyalty program. You may find tiered programs work better for high commitment, higher price-point businesses like airlines, hospitality businesses, or insurance companies.
Loyalty programs are meant to break down barriers between customers and your business — are we seriously telling you to charge them a fee? In some circumstances, a one-time (or annual) fee that lets customers bypass common purchase blockers is actually quite beneficial for business and customer alike. By identifying the factors that may cause customers to leave, you can customize a fee-based loyalty program to address those specific barriers.
In 2011, eCommerce shopping cart abandonment hit a record high of 72%, and is still rising. This abandonment is often caused by “sticker shock” after tax and shipping prices have been applied. ECommerce giant Amazon found a way to combat this issue in their loyalty program called Prime. For $79 annually, Prime users get free 2-day shipping on millions of products with no minimum purchase, among other benefits.
This program is innovative because it charges loyal customers while providing enough in return for those frequent shoppers to realize the benefits. Analysts estimate that Amazon actually loses about $11 annually for each Prime subscriber, but makes up for it in increased transaction frequency that would not have otherwise happened without their exclusive benefits.
Clearly this system is most applicable to businesses that thrive on frequent, repeat purchases. For an upfront fee, your customers are relieved of inconveniences that could impede future purchases. Amazon has mastered this for eCommerce, but this loyalty program model also has potential to work for B2B businesses who deliver products to businesses on a regular basis.
Really understanding your customer means understanding their values and sense of worth. And depending on your industry, your customers may find more value in non-monetary or discounted rewards. Every company can offer promotional coupons and discount codes, but businesses that can provide value to the customer in ways other than dollars and cents have an opportunity to really connect with their audience.
Patagonia, an eco-friendly outdoor apparel company, realized that their customer needed more than just points and discounts from a loyalty program. Late last year, the company implemented its Common Threads Initiative. In it, they partnered with eBay to help customers to resell their highly-durable Patagonia clothing online through the company website.
This program builds on their brand of sustainability and creating a high-quality product, and it matches perfectly with the company’s customer persona by providing a value that they really care about. So before implementing a loyalty program of this nature, be sure you’ve researched and designed an in-depth customer persona!
Strategic partnerships for customer loyalty, also known as coalition programs, can be extremely effective for customer retention and company growth. Again, fully understanding your customers every-day lives and their purchase process will help determine which company is a good fit as a partner.
American Express has a huge partner base with companies across the country. Their recentTwitter Sync campaign rewards customers for tweeting about them by syncing discounts and deals with Twitter #hashtags. According to Visibli.com, cardholders have redeemed over $2,000,000 in rewards. Participating companies that are benefitting from their coalition with Amex include Whole Foods, Staples, and Zappos.
For example, if you’re a dog food company, partner with a veterinary office or pet grooming facility to offer co-branded deals for mutual benefits for your company and your customer. The target audience obviously owns a dog, so any services that dog will require offer added value from your company. Providing customers with value beyond even what your company can offer will show that you understand them, and grows your network to reach your partners’ customers, as well.
Who doesn’t love a good game, right? Turning your loyalty program into a game is a fun way to encourage repeat customers and, depending on the type of game you choose, help solidify your brand’s image.
GrubHub, an online food ordering and delivery website, started Yummy Rummy late last year. Once customers place three unique orders through GrubHub, regardless of price, they get to play a game for a chance of winning free stuff. Players choose one of four cards and have a 25% chance of winning a free dessert, drink, gift card or other cool stuff.
It’s important that customers understand you’re not duping them out of rewards, though. The odds should be no lower than 25% and the purchase requirements to play should be attainable. This type of loyalty program has potential to backfire if customers feel like your company’s jerking them around to win business. Executed properly, however, this type of program could work for almost any type of company, even an off-the-beaten-path B2B company. If your audience enjoys having a little fun and purchases frequently, this type of program can make the buying process fun and engaging.
Considering how many marketers are offering loyalty programs (whether they are effective or not is another story), one innovative idea is to nix the idea all-together. Build loyalty by providing first-time users awesome benefits, hooking them, and offering those benefits with every purchase.
The concept sounds simple, but one of the most innovative companies on the planet implements this strategy: Apple. Even the most loyal Apple customers don’t get special rewards or discounts … because they don’t offer them to anybody. Apple “enchants” customers by delighting them with a product or service the first time. The loyalty is voluntary and long-lasting, according to Apple evangelist Guy Kawasaki. Apple has plenty of supporters, both online and off, ready and willing to rave about their product. For them, loyalty happen organically.
This minimalist approach works best for companies whose products or services are unlike any other. That doesn’t necessarily mean that you offer the lowest price, or the best quality, or most convenience — I’m talking about redefining a category. If, like Apple, your company is pioneering a new product or service, a loyalty program may not be necessary. Customers will be loyal because there are few other options as spectacular as you, and you have communicated that value from your first interaction.
As with any initiative you implement, there needs to be a way to measure your marketing success. Customer loyalty programs should increase customer happiness and retention; and there are ways to measure these things besides in rainbows and sunshine. A lot of ways, actually. Different companies and programs call for different analytics, but here are a few of the most common metrics companies watch when rolling out loyalty programs.
Customer Retention Rate: This metric is an indication of how long customers stay with you. With a successful loyalty program, this number should increase over time as the number of loyalty program members grows. Run an A/B test against program members and non-program customers to determine the overall effectiveness of the loyalty initiative. According to Fred Reichheld, author of the Loyalty Effect, a 5% increase in customer retention can lead to a 25-100% increase in profit for your company.
Negative Churn: Churn is the rate at which customers leave your company; negative churn, therefore, is a measurement of customers who do the opposite — upgrade, or purchase additional services. These help to offset the natural churn that goes on in most businesses. Depending on the nature of your business and loyalty program, especially if you opt for a tiered loyalty program, this is an important metric to track.
Net Promoter Score: NPS is a customer satisfaction metric that measures, on a scale of 1-10, the degree to which people would recommend your company to others.
NPS is calculated by subtracting the percentage of detractors (customers who would not recommend your product) from percentage of promoters (customers who would recommend you). The fewer detractors, the better. Improving your net promoter score is one way to establish benchmarks, measure customer loyalty over time, and calculate the effects of your loyalty program. A great NPS score is over 70% — your loyalty program can help get you there!
Customer Effort Score: CES asks customers, “How much effort did you personally have to put forth to solve a problem with the company?” Some companies are vying for this metric over NPS because it measures actual experience rather than the emotional delight of the customer. A Harvard Business Review study found that 48% of customers who had negative experiences with a company told 10 or more people. In this way, customer service impacts both customer acquisition and customer retention. If your loyalty program addresses customer service issues, like expedited requests, personal contacts, or free shipping, this may be one way to measure its success.
Low-level redemption is certainly a great way to retain your initial customers! Learn more about how we can help with that by implementing our fully customizable digital rewards platform into your loyalty program.
What do you think? Does your loyalty program utilize any of these strategies? Leave us a comment below!
Original document from Hubspot.
The full article can be viewed here.
The excerpt highlighting digital rewards can be found below:
6. Instant Rewards: InterContinental Hotels Group incorporated a new redemption category, digital instant rewards, that it hopes will encourage new members and light users to see value in its loyalty program and stay dedicated to the brand. Its 65 million Priority Club members now have access to download music with as few as 300 points, 800 points earns popular games once more than 1,200 points have been earned, software for the home office, foreign language education and multimedia tools are available. The idea to offer instant rewards came from member research.
Challenge: Acquire loyalty club members.
Solution: Add a layer of non-proprietary online rewards to facilitate instant redemptions.
Results: Since complementary program implementation, 25 percent of the instant online rewards redemptions have been from new members.It may seem intuitive that Sapphire Technology, a manufacturer and supplier of graphics cards and mainboards, would offer its loyalty club members digital rewards. After all, it has a severe-looking, cross-armed female avatar staring down anyone daring to visit the rewards page. But it did take Sapphire a few months to offer that aspect of instant gratification to its Sapphire Select Club (SSC) members.
The Hong Kong-based company with a Canadian office in Markham, Ont., launched its loyalty club in October 2009 by offering members exclusive product information, access to events and contest prizes ranging from Honda scooters to iPads. But by summer 2010, the company decided it was time to offer Sapphire’s tech-savvy customers instant online rewards, says Adrian Thompson , Sapphire’s vice president of marketing and loyalty.
In June 2010, Sapphire tapped Santa Ynez, Calif.-based online instant rewards and incentive service the first club™ to offer loyalty club members digital prizes.
SSC members who purchase products from Sapphire are eligible for online currency that can be redeemed for downloadable music, games, software, mobile applications, audio books and eBooks. Movies may also soon be available.
Thompson says Sapphire placed online advertisements and sent emails to its loyalty club members to alert them to the new rewards. Information also appeared on the website, in newsletters and on social networks.
These new rewards also meant adding a membership tier. SSC Silver membership provided the old rewards. SSC Gold membership added in the digital rewards, as long as Gold members completed a form requesting their graphics card serial numbers in addition to the data the overall membership form requests—name, email address, and more specific information such as birth date, gender, areas of interest, product interest and opt-in possibilities for Sapphire’s email list and “screened third party” marketing.
Depending on the purchase, Gold members receive vouchers for 25, 50 or 100 “ClubCoins,” which they can redeem for digital rewards, Thompson says. Since including the digital prizes in the SSC, Sapphire’s run six separate rewards campaigns.
Original Document from Target Marketing Mag.
Over the past year, banks have been using technology to create new channels of communication, with the hope of deepening consumer loyalty. As other traditional benefits are swept away, can a multichannel approach be enough keep consumers from switching?
Last month, market research firm eMarketer released a report that banking online deepens customer loyalty among banks. This research should be valuable to banks considering a J.D. Power & Associates study found that retail banking consumers are shopping and switching banks faster than ever. The main reason being life circumstances such as; divorce, unemployment or moving.
The eMarketer study also mentioned the preferred banking method for U.S. consumers was online banking (44%) for ages 18 – 54 in 2010 and second most popular for those age 55 and older. Not surprisingly, for 18 – 34 year olds branch banking was the lowest among the age groups at 20 percent. This same age group pretty much never uses mail (1%) and had the highest usage of mobile banking at 4 percent.
With so many channels of communication available, the study determined that “online banking customers are more likely than offline customers to take advantage of additional services with the same bank,” and in the end, “are less likely to switch to another bank.”
In most situations, banks can’t control what life changing events occur to their consumers, but what they can control is how members engage with the bank for their financial needs. This, for me, is the key takeaway and reason why banks will continue to shift their business to rely more on services driven by technology such as; personal financial management tools, mobile check deposits and merchant-fund rewards.
Based on findings, we now know that Generation Y is adopting a digital form of banking quicker. Giving any bank or credit union a new opportunity to become the primary financial institution for this generation. As much as financial institutions enjoy seeing their older members engaging with these tools, they also understand that the institution that connects with Generation Y will be in the greatest position for future profits.
Can this new level of multichannel engagement create a new from of vendor lock with banks? Would you be less likely to change banks if you were managing all of your finances through their online banking platform? What do you think?
Original document from My Bank Tracker.
by ICLP Loyalty
The world is arguably undergoing one of the greatest media transformations in history. While the internet has been an evolutionary and revolutionary step, thanks largely to Apple, the mobile device has turned into a personal computer in the consumer’s pocket – and one which is always available and always turned on – offering marketers a whole new gateway to new and stronger customer relationships, according to Garret Ippolito of MasterCard.
We live a mobile lifestyle. This lifestyle has been fueled by the near ubiquitous penetration of messaging devices. You can’t escape it. Video screens are talking to you in the elevator, when pumping petrol or riding in a city taxi. How we consume media has fundamentally changed. Marketers have been treading slowly into the mobile pool. But we are at a point where it is critical to engage customers via the mobile device, creating whole new ways to experience your loyalty programme and enhance its value.
The number of global mobile subscribers is now at least double the number of global internet users and, as mobile internet usage penetration increases, these figures are starting to converge. In Western Europe and North America, the market has already hit a 3G penetration inflection point (3G being the technology backbone upon which smart phones operate). As such, the mobile era has truly arrived. The key question, then, becomes whether or not marketers can risk others solidifying customer relationships, or should they do it themselves?
World demographics are also rapidly changing. In East Asia, up to 60% of some country’s populations are under the age of 30. In the US, the second fastest growing age segment is under 35. Much of the online usage changes we are witnessing are being driven by the younger generation (for example, Twitter, Hulu, Shop Savvy, and FourSquare). This demographic is also the most mobile savvy. On Facebook alone, there are more than 65 million active mobile users (incredibly, 1 million users commented on their friends’ status changes via mobile handsets within the first 24 hours of this feature’s launch). This is a testament to the power of the mobile channel. But no one in the loyalty arena has yet locked in their relationship with this up-and-coming, mobile-savvy demographic. This is clearly an opportunity for loyalty practitioners.
So, in venturing into the mobile realm, it is critical not to have your mobile strategy dictated by the technology itself. Many mobile strategies go astray as companies do not fully understand how their customers use their mobile devices, instead adopting tactics merely because they want to be first, because their competitors are active in the space, or because it is seen as being ‘trendy’. Rather choose a strategy and tactics that support your business goal of solidifying customer relationships.
Original document from Ulta Marketing.
by Tim Peterson
To maintain their relevance, brands must adapt to the unprecedented rate at which consumers are using technology, said Bonin Bough, global director of digital and social media at PepsiCo, on March 23.
Bough, delivering the keynote address at The Social Consumer: Case Studies and Roundtables 2011 event in New York, said marketers must recognize the importance of technologies such as mobile and social media in consumers’ lives and reflect that with their brands.
“Digital is at the heart of our consumers, and it needs to be at the heart of our brand,” he said. “Organizations have failed to adapt to change, and what we’re facing is a gap between where society is digitally and where organizations are.”
Bough added that marketers must close that gap by not being afraid to experiment with digital channels for consumer engagement.
“When you look at the companies that are winning, the ones that are winning have an iterative mindset,” he said, adding that PepsiCo’s senior leadership has recognized the need for this transformation.
For example, Bough said that the Pepsi Loot app, gave the company an understanding of consumer foot traffic while rewarding consumers who checked in at participating locations. The company relayed that information to participating outlets, and offered deals on days when there was slow foot traffic, he said.
“I think digital fitness means the ability to adapt to changes in the digital environment, and the way you get digitally fit is the same way you get physically fit,” said Bough. “It takes training. It takes rigor. It takes commitment. It takes pushing yourself past the point of where you want to say no.”
Original document from Direct Marketing News.
by Denis Huré and Jill Goldworn
For many years now, hotels have offered their loyalty reward program members the most logical rewards: recognition and appreciation through premium service. This is no longer a competitive option. Consider the rise of OTA loyalty programs: by leveraging their strength and reach across a multitude of brands, OTAs are developing universal programs that offer customers real savings through free stays and deep discounts. The thought of a single brand competing with this concept is a tall order. It’s time for hotels to rethink their approach to loyalty.
Backing up the OTA concept, a recent Chief Marketing Officer Council study found that 66% of top loyalty program members said that “discount and savings” were among top priority across all segments. The two attributes that most hotel programs primarily rely upon, “more individualized attention” and “recognition and appreciation,” represented only 30% combined. Clearly, discounts and savings are today’s trend in loyalty programs.
Of course, if hotels want to discount, they can simply discount their rate to loyalty program customers; however, a better way is to charge normal rate and offer the loyal customer a tangible incentive that captures their attention while representing true savings, or relevance, to them. This incentive should be a low-cost solution in order to provide an ROI that exceeds the amount of a comparable rate discount to the customer. There’s just one problem: most tangible incentives have a high cost of redemption/fulfillment — thus, ROI is harder to maintain.
So how can hotels provide loyalty program members with a more tangible incentive? According to a recent Mintel study, 61% of the respondents suggested that an important attribute of a rewards program would be redemption for merchandise they would buy anyway. Call it a relevant reward: something the loyalty member will probably buy, regardless of their interaction or involvement with your hotel.
The challenge here is to offer a large variety of products, throughout a variety of categories, to capture the relevant reward interest of each loyalty program member. In addition, relevant rewards have a timeframe: they are usually relatively inexpensive items that will be purchased within days. Only digital content can provide such a large variety of content (music, books, games, and more) instantly. In this way, instant digital content is a tangible incentive, seen as a real discount, or savings: a relevant reward.
In addition to offering loyalty members relevant rewards, digital content provides an adaptable solution to combat OTA programs. One example: in order to steer customers away from commission-based sites, hotels can offer instantly downloadable content as an added incentive for booking direct. The opportunities for promotion are endless and cost effective. Furthermore, the digital download platform gives hotels the ability to immediately track message effectiveness and add customer information to existing CRM programs.
So think about rethinking your loyalty program. It’s doubtful that individual properties can compete with the trend in OTA programs, so it’s time to attack it from a different angle.