Re: Loyalty programs

From: Jim Novo <jimnovo_at_sprintmail.com>
Date: Tue 14 Dec 1999 11:41:54 -0500

STEPHEN JONES WROTE:
> What kind of cross-over is there between online and
> offline programs (traditional smartcard points
> redeemable online; incentives for surfing behavior
> redeemable offline)?


There are cross-promotions going on between online and
offline divisions, where coupons are distributed in the
stores for use online (Barnes & Noble, for example).
This is a form of loyalty *building* but in my mind,
it's not a fully integrated loyalty program until you
receive points or credits from both online and offline
sources, consolidated into a single loyalty account
that can be used to redeem for rewards.


> How do the major online programs recruit and retain
> members? How are the programs supported from a
> marketing and creative standpoint, both on and offline?


These are very broad questions. Generally, members are
recruited and retained by the very nature of a loyalty
program. They're given an incentive to join and ever
increasing rewards (hopefully) to stay.

These programs require a high level of attention to be
successful, since they involve both a lot of creativity
and have a lot of "execution risk", meaning it's easy
to screw them up, both financially and operationally.


> What does the future look like for online loyalty
> programs? Any major mergers or acquisitions on the
> horizon, or strategic alliances between on and offline
> players?


For any business where the products are moving towards
commodity status, loyalty programs can be a powerful
tool. Given the competition and nature of products most
successfully sold on the 'Net, I would say the future
looks bright for loyalty programs.

There are very few companies with the experience or
software to do genuine loyalty programs on the 'Net,
never mind hybrids between online and offline.
Fortunately, the software side of things is improving
rapidly, with pieces of the puzzle offered by
BroadVision, Kana, Epiphany, and others. Consolidation
on the software side is already underway and proceeding
rapidly. I would expect the same on the wetware
(agency) side as soon as the market embraces the
*retention* of customers as important.

So far, all that really matters is customer
acquisition, since most of these companies don't have
many customers to retain. I would expect the "older"
'Net companies (Amazon, Yahoo, Egghead, etc.) to be
some of the first to climb on board, perhaps by agency
acquisition, as Yahoo did with Yoyodyne.

This topic might be a little "off-list", so if you'd
like to type about it further, feel free to contact me.


Jim Novo
Marketing Mercenary
jimnovo_at_sprintmail.com




Received on Tue Dec 14 1999 - 10:41:54 CST