Posted on July 1st, 2010
Recently, while trying to obtain a mortgage, I spoke with a Quicken Loans customer service representative named Jorge (I omitted the last name here to save him some dignity). On the phone, I told him that we have not decided on a lender and that we wanted to get an idea of what Quicken Loans had to offer. Our intention was to shop around for the best deal AND service. Apparently, the fact that we are smart shoppers did not rest well with Mr. Jorge. He immediately asked us for a commitment that we are going to work with Quicken Loans if he were to spend any time working with us. When I told him that we cannot make such a commitment at this time, he refused to work with us. Needless to say, I finished my conversation with him quickly and crossed out Quicken Loans as a candidate lender.
What Mr. Jorge is trying to do is not uncommon in the business world — he is trying to lock in customers (or in my case, potential customers). Wireless companies do the same thing, by locking up our phones so that they can only be used with a specific provider. This attempt at locking in customers is not without a good reason. After all, today’s consumers are very fickle. Combined with the wealth of information we can find online and through social networks, we are given the power to choose the best service at the best price. So naturally companies want to create some kind of switching barrier so that we won’t go somewhere else.
Image by mskogly | CC 2.0
The question is how effective such a switching barrier really is. The answer is: not very effective at all. Read More »
Posted on June 23rd, 2010
If you are in charge of designing or revamping a loyalty program, it can be useful to seek inspiration from others companies’ programs. Recently, Colloquy, a LoyaltyOne company, released a LoyaltyScan database that can make this research much easier. The database contains information about the background and program design for 500+ loyalty programs around the world, and includes details such as program launch date, point earning mechanism, hard and soft benefits offered, member communication, data collection, and total enrollment.
To illustrate the use of the LoyaltyScan database, I pulled together a selected list of loyalty programs from the retail sector and compared their designs below:
| Borders Rewards | Barnes & Noble Membership | DSW Rewards | Best Buy Reward Zone |
| Products | Books & CDs | Books & CDs | Shoes & Accessories | Computers & Electronics |
| Launch Date | July 2007 | April 2006 | September 2006 | 2002; Relaunched September 2006 |
| Joining Requirements | --Free
--Sign up online or in store | --$25 annual fee
--Sign up online or in store
--Extra bonus (20% coupon) for online sign-ups | --Free
--Sign up online or in store;
--Membership card optional (use phone number instead) | --Free
--Sign up online or in store |
| Point Ratio | Does not use points but directly use consumers' qualifying purchase total | Not point based | --10 points per $ on regular priced merchandise;
--5 points per $ on clearance merchandise.
--Premier members earn extra 50% more points per dollar spent | --1 point for each $1 spent in store or online
--Premium silver members get 25% bonus points |
| Point/Program Currency Expiration | Fixed: end of calendar year | N/A | Rolling: after two years of inactivity | Rolling: after 12 months of inactivity |
| Hard Rewards | $150 qualifying purchases = $5 Borders Bucks toward future Borders purchases | --40% off hardcover bestsellers;
--20% off adult hardcovers;
--10% off almost everything else online and in stores. | 1,500 points = $10 reward certificate toward future DSW purchases | 250 points = $5 reward certificate toward future BestBuy purchases |
| Reward Redemption and Expiration | --Redeem online or in store
--Expires the end of the month in which the reward is issued | Show membership card or input membership number at check out | --Automatic issuance of reward certificate when earned;
--Certificate expires after 180 days | --Online or in-store 5 weeks after reaching threshold
-- Certificate expires after 90 days |
| Soft Benefits | Exclusive in-store offers and special weekly coupons tailored to their interests as indicated at enrollment, plus the latest news, recommendations, all via email | --Invitations to book signings, readings and other members-only events
--Special promotions throughout the year | --Monthly email newsletter
--Premier members have a special email and phone number reserved just for them. | --Articles and insights from the tech pros at CNET
--Member-only offers and giveaways
--Special bonus point offers
--Premier Silver members Point Banking and Exclusive Rewards; Member-Only Events; Dedicated Premier Silver Helpline; Free Shipping at BestBuy.com; Extended Return Policy; and Complimentary Special Offers from Geek Squad |
| Program tiers | None | None | Premier membership after 6,000 points earned in a calendar year | Premium Silver membership 31 days after $2,500 of qualifying purchases during a single calendar year |
| Program Partners | None | None | None | Netflix
Barnes & Noble
Expedia.com
Theater Seat Store
1-800-FLOWERS.COM
Sony Music
Teleflora
Rewards Network |
Caveats
- There is no clear indication from Colloquy on whether this database will be updated frequently. So if be sure to verify data accuracy down the road.
- Not all data are available for all programs.
Despite these caveats, LoyaltyScan can be a valuable resource to check as you define your own loyalty program parameters.
Posted on June 16th, 2010
Image by wwworks | CC 2.0
The 2010 FIFA World Cup kicked off on June 11. While total viewership is still unknown at this point, Nielsen has reported an 80% audience gain for ESPN and ABC during their weekend coverage of the event. For past World Cups, FIFA reports a worldwide audience of 26.29 billion in 2006 and 26.4 billion in 2002. If these statistics are not convincing enough, I give you my dad as another example. He would stay up late or get up in the middle of the night to watch a match, and he has been doing so for as long as I could remember.
Undoubtedly, the FIFA World Cup and soccer in general claim one of the biggest fan bases around the world, and many people feel fiercely loyal toward the sport and toward their team (think fans’ riots after losing a game). Wouldn’t it be great if your company can have the same level of loyalty among your customers? While whether an average consumer’s loyalty toward a brand can reach the level of loyalty toward a sports team is open to debate, there are at least valuable loyalty lessons that can be learned from how people associate themselves with sports and sports teams. Read More »
