Recently I had the opportunity to share some thoughts on loyalty marketing with Alexander Meili, Planning Director Europe of ICLP Loyalty and Strategy Advisor to Cards on Mobile. We talked about the future of Loyalty Marketing and on how loyalty programs are dealing with the rise of social media tools. Here is the Q&A session:
1 – According to your experience on loyalty marketing, how are major companies embracing social marketing tools? Are they just making a copy and paste into existing loyalty programs or are they taking the opportunity to completely re-design and re-imagine their loyalty schemes?
AM: We have to keep in mind, that Facebook or Twitter were not developed originally for corporate, but for social marketing purposes. Many organizations struggle with finding the right niche in which advertising can thrive. Only few succeed. However, the advent of social networking has completely changed the dynamics of online marketing. Basically, Facebook is a window for companies to present themselves. But this is not enough. To be successful on Facebook, companies need to convert fans into customers and customers into fans.
As a rule of thumb: You are successful on Facebook, if you have > 150.000 followers or fans. But don’t forget: Facebook, Twitter or My Space are not the holy grail for everybody. You need to actively manage theses “likers/follower”, respond to their demands. After all, it’s all about transmitting emotions. Both, companies and customers want to be loved. So give something special to the Facebook fans: Lufthansa is giving away miles, Deutsche Bahn uses currently facebook as sales channel for special tickets (chef tickets). On the other side, we have been experiencing companies who have stopped with being on Facebook or Twitter (we call this phenomenon “twitticide”) or others that are still not on these platforms: British Airways Executive Club, Tesco’s Club Card.
2 – Can you mention an example of successful loyalty strategy with social marketing?
AM: Starwood Hotels & Resorts is one brand that has rapidly embedded social media as part of its ongoing loyalty strategy. In an innovative application of this, Starwood created a global scavenger hunt for their Starwood Preferred Guest (SPG) members. There was a prize, of course, but the crucial factor was that clues were delivered via Facebook and Twitter. This marketed the competition as something aimed at a particular subset of SPG members. Those members were fed information on a range of hotels across nearly 100 countries as they tried to uncover the clues in the game.
3 – How do you see the future of loyalty programs? Do they will be more focused on sales with rewards and discounts or more on customer care and overall customer satisfaction?
AM: Yes, money is and will remain the key factor. It is about driving incremental revenues through a long-term rewards mechanism – no instant discounts for past behaviour, but implicit cash-back for future business, supported with improved customer service (dialogue marketing).
The future of loyalty marketing developments will embrace following three areas: POS Loyalty, Geo-localization and Social Media. Through today’s technologies, this is now possible. POS Loyalty means that the loyalty programme must be in real-time and happen at the point of sale (e.g. real-time targeted promotions on the cash receipt). Geo-localized Marketing (mostly through mobile smart phone applications) and Social Media platforms will help driving additional word-of-mouth.
Thanks a lot Alexander, excellent insights and very clear vision of the future. Hope hearing from you soon about emerging trends in loyalty marketing worldwide.