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How to Use Gift Cards to Give an Experience This Holiday Season

It was my birthday recently (why thank you kindly for the well wishes!) and the night before official festivities were to take place my wife received a text from my sister asking for gift advice. Without looking up from her phone, she turned to me and asked for ideas to relay back. I rattled off a few of my favorite beers and ended with the caveat: “and if they don’t have those in stock you know I enjoy a good browse through the aisles.” What I didn’t put together until the next day when I opened my present to reveal a sleek little gift card (thanks sis!) was that what I had actually asked for was an experience.

With the overwhelming focus on millennials over the past few years, the term “experiences” has gotten a lot of play within the marketing and loyalty space. Numerous studies show that this key demographic holds an affinity for experiences, and often articles – like these from Forbes and Business.com – position this as a clash between the preference of material goods vs experiences, but that is not the full story. When reports quote that younger consumers “prefer” or “would rather spend money on” experiences it is misleading as this often paints the picture that these generations are primarily focused on accumulating cultural wealth instead of monetary wealth, flocking towards wildly unique happenings in an act of rebellion against consumerism.

This is false.

This type of presentation fails to acknowledge that you don’t need to mark your calendar and buy tickets to an event in order to have an “experience”.

Life is a constant experience.

And the goods we interact with in our daily lives have the potential to elevate each and every moment.  And that is what younger generations care about – creating memorable moments.

Yes, sometimes that means checking an item off the bucket list. Other times it could be hosting a backyard bonfire where laughs are shared a bit too loud and a bit too late into the night. Or simply capturing an image and sharing it with friends and family who will appreciate its contents. All are experiences.

And as I have been reminded recently by the gift card from my sister, merely the hunt for material goods can be a very enjoyable experience in of itself. A big reason for this is because when we purchase things, we imagine ourselves enjoying them in the most ideal of situations. It’s a similar phenomena as to why playing the lottery is actually worth it, even if you don’t win. We garner enjoyment from the thought of the experiences we will have in the future, allowing us to take greater pleasure in the now. So

So with the gift giving season nearly upon us, how do you ensure that the gift cards that you are giving will result in an experience not once, but twice for the end recipient? To take a deeper dive into the concept of having an experience, while prepping for an experience (where are Leo and Joseph Gordon-Levitt when you need them?) I want you to imagine yourself in 2 scenarios:

Scenario 1:

You open a birthday card with a decently funny punchline courtesy of Hallmark with a generically uplifting sentiment scribbled below from the sender, along with a $50 Target gift card.

Useful no doubt, but not very exciting or memorable. A likely scenario is that you slide the gift card into your wallet and forget about it until you are at the checkout aisle a month or two later (and let’s be honest, this isn’t even the first time you have been to Target since you received it – just the first time you actually remembered you had a gift card). It covers about half of your purchase and moves out of mind as soon as you pull out a credit card to cover the balance. There is no specific item that the gift card bought, it was essentially a great coupon. Furthermore – by the time it’s used you might not even remember who gave it to you (guilty).

Scenario 2:

You open a birthday card with a decently funny punchline courtesy of Hallmark, a $50 Target gift card, but this time a specifically tailored message from the gifter stating that they want you to use these funds to ‘revamp your board game collection’ for the next game night. Suddenly you aren’t just given a $50 catch-all, you are given a passport to adventure. (I realize not everyone will consider picking out a couple new board games as a “passport to adventure” but I do, so if you disagree simply replace the scenario with something you are passionate about.)

The key difference is that in Scenario 2 the presenter framed their gift in a particular manner, which in the case of a gift card causes 3 things to happen:

1. Clarity of focus. The focus has been shifted from the monetary value of the gift to the potential items that will be purchased which allows for a vision of the ideal state where those goods will be used. (i.e. the specific framing has created anticipation – one of the keys to a great experience).

2. Permission to spend irrationally. ‘Irrational’ might be a stretch but certainly the gifter has empowered the giftee to make a non-utilitarian decision. Let that sit. The delivery of the gift, not the gift itself, is what is impacts the end user’s ability to justify their spending behavior.

Scenarios 1 & 2 impart the same financial benefit, but because the second narrative includes commentary from the gifter stating: “I am giving a green light, nay a directive, to spend this on an activity of pleasure” there is an instant switch in the mental accounting of the recipient, stating that they can (and should) treat this pile of money differently than their usual expense budget. This is a vital piece of the puzzle.

3. Evoking a deeper emotional response. Gift cards are notorious for doing the opposite. But adding the personal touch of how the recipient could use the card improves the overall memory halo of the gift. No more forgetting who made your shopping adventure possible.

The bottom line? It is all about how the gift card is framed in the mind of the end user.

Prime the mind to pay attention to the experience that the gift card allows.

So this holiday season when you are checking names off the list, don’t feel bad by settling on a gift card. Quite the contrary! Know that based on how you present them, you have the potential to be giving millennials the thing they value most – an experience – regardless of the brand on the card.

 

Loyalty Program Design: Ignore Customers, Increase Returns

When speaking with brands on loyalty program strategy, it’s clear companies know they should be utilizing their data and personalizing the user experience, but there is often a barrier of hesitation to openly treat customers differently. This hesitancy is rooted in the fear of ostracizing a portion of their consumers who are deemed “less valuable”. Why can’t we simply strive to provide every customer the same high-end treatment that they deserve? Well, because they don’t deserve it.

Not all customers are created equal. A successful loyalty program design allows a brand to:

  1. Focus on Best Customers: New friends are great, but old friends are invaluable. Your brand’s best, loyal customers will celebrate triumphs and help carry the business through rough times. They are different from the impulse purchase crowd and should be revered with your attention.
  2. Make Customers Feel Important: Customers expect special treatment. Research conducted by Forrester indicates that 59% of US online adults who belong to a customer loyalty program say that getting special offers or treatment that isn’t available to other customers is important to them.
  1. Reward Good Behavior: When customers exhibit positive engagement behavior with your brand, recognize it. Furthermore, let them know they will be rewarded for being good. SWA’s “Companion Pass” and Sephora’s “Rouge” are examples of how implementing aspirational status tiers with meaningful rewards can drive fierce loyalty.
  2. Maximize Promotional Budget: Offering all customers the same discounts, rewards, and communications can get expensive – and boring. Segmenting customers within a loyalty program will allow you to track the types of products they buy, how often they redeem, and how well they respond to communications, allowing companies to track the progression of a consumer’s journey with their brand – ideally even leading to predictive analysis.

Of course, there are instances where treating every customer the same does work. Take Publix, for example. At the end of last year, Loyalty360 published a post about Publix & how their “treat every customer the same” mindset has helped them retain brand loyalty over many generations. The grocery-chain doesn’t necessarily have a traditional loyalty program, but they do have many loyal customers. Their belief is that every customer should be treated to the same superior customer service and they attribute their long-term brand loyalty to this consistent treatment of customers. So how has this strategy worked so well for Publix?

First, they emphasize their core principles – remaining true to providing competitive prices, quality products, and customer experience. This ties directly back to their slogan “Where Shopping is a Pleasure” – an easy to digest value prop which they ensure is carried out by their eager-to-help, positive associates.

Next, they deliver consistency while also adapting to the industry surrounding them.  Customers return week after week because their in-store experience is a positive, known commodity. For consumers with more evolving needs, Publix has several online ordering options, including the increasingly popular home delivery powered by Instacart.

While this informal loyalty approach has worked for Publix, this wouldn’t work for every company seeking to achieve brand loyalty. Publix has the distinct advantage of being a “ritual vendor” (The average US household made 1.5 trips to the grocery store per week in 2017) and usually consumers repeat at the same store due to proximity and familiarity – two inputs that make a habit hard to shift once engrained. Publix also has a long history of superior customer service, and unfortunately brands looking to retain and engage customers in the here and now can’t afford to wait 80 years to build up that kind of reputation.

Before dismissing the Publix case study as irrelevant to your company’s situation there are aspects of the Publix secret sauce which every brand should aim to replicate, namely creating a resonating value prop + delivering your core product well. Without these key foundation blocks, a brand will not succeed no matter how clever their loyalty program design is.

So how do you determine which strategy is right for you?

As you can see, no loyalty program is one-size fits all. Program design must be unique and tailored to the brand’s needs and more importantly, their customer’s wants and needs. And while Publix doesn’t operate on a formal loyalty program, their initiatives over the last 87 years have formed loyal customers who stay away from competitors.

 

The State of Global Loyalty: A Conversation About South Africa (Series)

What does customer loyalty look like outside of the U.S.? How are companies around the world addressing the evolving challenges of customer retention? And what can U.S. loyalty marketers learn from their global counterparts? 

Welcome to our Global Loyalty Series! Seeking to find those answers, I recently posed questions to loyalty experts in our Maritz Global Partner Network, challenging them to offer insights  unique to their regions around the world. 

This week, I connect with Barry Coltham, Managing Director for Achievement Awards Group, with input from Richard Cramer, Director of Loyalty.

Over the past 26 years, Barry has been instrumental in building the company’s deep expertise in automotive, banking, healthcare, and retail verticals and leading major research-based initiatives. Barry has a Master’s degree in Business Leadership and is a Certified Human Performance Technologist through the International Society for Performance Improvement.

 

As the Director of Loyalty, Richard leads a team of passionate loyalty marketers and analytics experts to deliver sophisticated, creative loyalty solutions. He is a veteran advertising executive with deep understanding of big brands, consumer psychology and relationship marketing. Maritz has been a shareholder in Achievement Awards since 2000.

1. What are some of the biggest challenge companies in South Africa are facing when it comes to retaining loyalty program members? What opportunities do you see for these brands/marketers? 

The major challenge is ongoing member engagement once programs have launched. We now have over 130 loyalty programs in South Africa, many that offer the same type of rewards. The value propositions have been watered down due to the on-going cost of running the programs which has resulted in member disinterest. Research by Truth Loyalty in 2017 found a decrease in the number of programs that women participate in, from 6.1 programs down to 5.6, as well as a slight decrease in the number of programs men belong to. If brands want consumers to stay involved with their program and frequently engage with it, something needs to change. The opportunity in South Africa is to go beyond rewards and to engender emotional connection and customer experience.

2. What do you believe makes a loyalty program in South Africa successful? 

A great value proposition and simplicity, the ease of use of a program, and surprise and delight rewards that are personalized and make members feel special. Another important element is the integration of programs with partnerships that are relevant and add value to the members’ lives. We can see in South Africa that the top programs are the ones that are easy to use.

3. What cultural changes are you seeing in South Africa that are affecting customer loyalty? 

There is a big transition over to mobile, and more people using internet on mobile phones than laptops and more mobile phones than the overall population. There is a fragmented, costly media landscape that does not reach rural poorer communities – mobile phones are the only way to access these members.

4. What’s the biggest piece of advice you have for loyalty marketers? 

There should be an understanding that you will have to increase sales by 6% to pay for the loyalty program. Most programs in South Africa reduced their value propositions because they did not factor in the cost of running the program. Employ a Specialist Implementation Agency and SAAS platform with experience in running the programs. The loyalty program is an integral part of the company’s DNA.

5. What is the impact, if any, of government regulations on loyalty programs in South Africa? 

There are two major legal acts that impact loyalty programs in South Africa: The Consumer Protection Act (CPA) and the Protection of Personal Information Act (POPI).

First, the CPA states that loyalty credits or awards are a legal medium of exchange (like cash) when suppliers offer it as consideration for any goods or services offered.  Because the loyalty benefits are legal forms of exchange, the goods given in return will also be subject to the CPA. This means that consumers are fully protected against defective, unsafe and hazardous products in the same way as a consumer who purchased goods and services with cash or on credit. Under the CPA, suppliers have a duty to ensure that the goods offered to consumers in loyalty programmes are in stock. In most advertisements you will hear the “while stocks lasts”, “subject to availability” or “terms and conditions apply” at the end, which suppliers believe cover them if they are not able to satisfy the promises made. The other major legal act, The Protection of Personal Information, refers to how loyalty programs process a lot of personal information and the processing of this information must be done lawfully.

About Our Global Partners:

Maritz partners with top loyalty practitioners worldwide as part of the Global Strategic Partner Network.  Carefully vetted, trained in Maritz’ solutions and in regular communication with our solution leaders, Strategic Partners bring geographic market-specific expertise to our global clients. 

3 Trends that Rewrote the Rules of Loyalty Marketing in 2017 (Part 3)

(This is the third in a three-part series on shifts that occurred in 2017 that will have long-term impact on the loyalty industry. Part 1: Liquid Currency covered the adoption of pay-with-points solutions and Part 2: Loyalty Program Fraud covered the increasing awareness of program hacking risks.)

Shift #3: Coalition Loyalty Programs Stumbled

If you were one of the many loyalty experts predicting the likely failure of any coalition loyalty model in the US, you might have ended the year enjoying a bit of schadenfreude.

2017 was simply a tough year for coalition loyalty to catch a break.

While the dominant form of loyalty program outside of the US — one wherein members can earn and redeem points freely across a defined network of complimentary brands (the coalition) — a large-scale coalition loyalty initiative has never succeeded in the US. That seemed about to change when American Express announced the launch of Plenti almost three years ago. But since then we’ve witness not just the multiple stumbles experienced by Plenti, but challenges with both of its Canadian-based counterparts:

  • Plenti – While boasting more than 30 million members and the support of Amex, Plenti has struggled to attract and retain key partners to maintain a strong coalition. And it ends the year seeing the exodus of more partners and declining support from their parent entity. 
  • Air Miles – the Canadian-based coalition program owned and operated by LoyaltyOne suffered a significant PR hit starting late in 2016, when Canadian media began to cover the upcoming first-time expiration of Air Miles points. Due to overwhelmingly negative public reaction that continued into this year, Air Miles reversed their decision and agreed to reimburse members who had already dumped their points. That decision resulted in a multi-million dollar loss, much of that in unrealized breakage. The incident pushed some Canadian legislators to pursue legal restrictions on loyalty point expiration policies. AirMiles subsequently announced other changes to their program in an effort to gain back some of the member good will lost over their point expiration issue.
  • Aeroplan – the Canadian-based coalition program, owned by Aimia, was jolted earlier this year when its key partner, Air Canada, announced it was leaving the relationship by June 2020 to establish its own proprietary loyalty program, a move that could potentially cost Aimia millions of dollars in lost revenue and leaves their coalition program without an airline anchor brand.

So, as I noted — a tough year for North America coalition loyalty schemes.

Its the Consumer, Stupid

When I first wrote about Plenti back in March of 2015 I asked, “Is Plenti the holy grail of loyalty?” I outlined my rationale for being skeptical that a coalition could succeed in the US, while expressing optimism that if any entity could pull it off, it was Amex. My main concern was whether US consumers would actuality understand and embrace a coalition loyalty program.

New data from a Maritz 2017 consumer study only reinforced my concerns:

  • 50% of surveyed consumers said they were not familiar with Plenti at all (although of those who were, a majority had a positive or neutral view of the program). 
  • Less than half of self-identified Plenti members said they have ever redeemed for a reward through the program.
  • The majority of members said they only purchase from one or two coalition members (defeating the main value prop of the coalition model)

Amex might still put it out, but its just as likely that the stumbles experience by Plenti and the significant challenges with Aeorplan and Air Miles portend an inevitable decline of the coalition model the US.

Implications for Loyalty:

When Plenti debuted it was considered a potentially serious threat to proprietary loyalty approaches. Coalitions offer brands the allure of participating in a loyalty scheme without the up-front costs and commitment that can come with launching their own program. But the last year has shown the weaknesses of the coalition model, particularly in its inability to engage US consumers. And when you take into account the challenges with Canadian coalition schemes, it seems that many companies are making the calculation that they are better served by owning their own program where their brand rules supreme. Moving into 2018, its a safe bet that proprietary loyalty will continue to have strong hold over the US loyalty market.

Thanks for following along with our 3-part series – Maritz Loyalty wishes you a Happy New Year!

Rewarding Customer Feedback: Build Loyalty While Gaining Consumer Insights

Consumers have opinions on just about everything. So, what if a company’s loyalty program rewarded customers for the opinions that matter most to the business?

Loyalty programs have traditionally focused on rewards and points for purchasing behavior. As a consumer, I try my best to be savvy about participating in loyalty programs of brands I consistently buy from.

A program I am highly engaged with is the Southwest Rapid Rewards program. I have a Southwest credit card, and like most millennials, I typically prefer being rewarded with experiences.

Because I do my best to get the most out of the loyalty programs I participate in, I pay close attention to the communications I receive from brands I’m subscribed to. That’s why this recent communication from Southwest caught my attention:

The email invited me to be part of a select group asked to participate in Southwest’s Rewards for Opinions panel. This offer gives the opportunity to take surveys on your own time and — this is the key part — receive Rapids Rewards points for completing each survey.

Rewarding customers with points in exchange for their feedback can be an effective strategy for keeping already loyal customers increasingly engaged for a few reasons:

  1. Rewarding for feedback makes customers and program members feel valued and special.

The language in the Southwest email presents the Rewards for Opinions panel as an exclusive group. When I saw that the panel was “by invitation only” I got the sense that I’m a valued customer because I was selected and invited to participate in this program. Likewise, the phrase “your opinions are worth thousands of points” tells the customer that their feedback on the brand experience literally has a dollar value.

To add to that sense of value, brands could consider ramping up the element of status by inviting top point earners to a “most valued customers” opinion panel, including formal invitations and a surprise gift for participating.

  1. Member surveys provide insights about consumers and their demographics that companies and brands can use to shape future business initiatives.  

Many of the surveys in the Rewards for Opinions portal asked about my demographics, spending habits, and much more.

A brand can leverage these surveys to collect new kinds of customer data that loyalty programs do not usually collect.  That information can, in turn, be used to make the loyalty program even more personal. The survey information can also be used by brands to further segment their customers and provide more insight into their spending habits and purchasing decisions. And by positioning the surveys as a tool to provide them with a better brand experience, it’ll be much easier to get a high level of engagement and candid response.

  1. Points for surveys help members increase their earn velocity.

While I am active in my Southwest Rapid Rewards account, I don’t travel often enough to accumulate as many points as I’d like. The Rewards for Opinions panel makes it easier for me to quickly earn points without a huge time commitment.

Based on new consumer research data from Maritz, the most common reason for disengaging from a loyalty program is rewards/benefits being too hard to earn or taking too long to earn — 44% of consumers rank it as their top reason for quitting a program. Member surveys provide an additional, quick way for members to earn points. If a consumer doesn’t travel frequently like myself, it might be hard for them to earn points. If they were given the option to take surveys to earn points, they could earn and redeem more frequently.

Adding a survey element to a loyalty program is a great way to diversify loyalty program offerings, gather information about your customers, and increase engagement within your loyalty program. Brands should consider this in their program design to further drive engagement and loyalty.

Do you receive rewards for providing customer feedback? If so, which programs do you participate in?