Reducing the Loyalty Gap

Although loyalty programs seem to be everywhere, many question whether such programs are indeed effective marketing tools. Strengthening the case for the skeptics, recent news report a restaurant that shut its doors in just a few months because it offered a ridiculously generous loyalty program. This is of course an extreme case. In reality, loyalty program providers can fairly easily keep program costs under control through smart program design involving the right combination of program currency, point ratio and reward structure.

Some loyalty program problems are not so straightforward however and can be much more subtle and challenging to deal with. One such example is the concern that loyalty programs foster loyalty to the program rather than to the company. That is, “I love Starbucks Rewards” may end up ringing more true than “I love Starbucks”. In the long run, this is bad news for the company because it makes the business overly dependent on the loyalty program. If a competitor decides to offer a more attractive program, customer attrition is likely to happen. What can businesses do to reduce this loyalty gap and make loyalty program members more loyal to the company rather than just to the program? I want to share with you some insights from a research project I conducted with a colleague in Belgium. Continue reading “Reducing the Loyalty Gap”

Social Media Showdown

As I mentioned in the last post, the MBA students in my Internet Marketing class this semester completed a social media project. In the project, they observed the social media efforts of two competing companies over the course of three consecutive weeks. It is not possible to repeat all the 20-page reports in a blog post, but I thought it may be fun for you to see which company within each pair was considered to be better. By better, I don’t mean what the companies have but instead what the companies do. In other words, we don’t use the sheer number of followers, fans, etc. as the judging criterion, as that can be easily skewed by the company’s existing market position. Instead, better is defined in the sense that the winning company is doing a better job interacting with and engaging consumers through these social media channels. In most cases, the social media channels observed were three of the following: Facebook, Twitter, Google+, YouTube, and company blog.

Before getting to the results, I’d like to thank the 21 students who put their hard work into the project and made this information possible. You guys/gals rock!

Now are you ready to see who won the showdown? Here you go!

IndustryOpponent 1Opponent 2Winner
AirlineDeltaAeroflotDelta (barely)
AutomobileAudiLexusAudi
AutomobileHondaToyotaToyota
CameraCannonNikonCanon
EntertainmentTiestoDavid GuettaTiesto
EntertainmentThe Ultimate Fighting Championship (UFC)Bellator Fighting ChampionshipUFC
FinancialTradeKingE*TradeE*Trade Baby
Food & BeveragesPizza HutDomino'sDomino's
Food & BeveragesPanera BreadSchlotzsky_sPanera Bread
Food & BeveragesRed BullMonster EnergyRed Bull
Food & BeveragesStarbucksGreen Mountain CoffeeTie
HealthWeightWatchersJenny CraigWeightWatchers
ITMicrosoftGoogleGoogle
ITNVidiaAMDNVidia
MediaMartha Steward WeddingThe KnotTie
Non-ProfitSaddleback ChurchFellowship ChurchSaddleback Church
Online ServiceMatch.comeHarmonyeHarmony
Online ServiceLiving SocialGrouponGroupon
SportsBillabongOneill'sTie
SportsNikeUnder ArmourNike, though both are doing a good job
SportsNFLMLBTie

Do you agree with the students’ observations? Please tell us what you think!

WeightWatchers Social Media Use – Conversation with Lauren Salazar

In my MBA Internet Marketing class, I ask my students to complete a social media project, where they observe and evaluate two competing companies’ social media efforts over the course of three weeks. It is always fun to see what comes out of that project, and to witness how competitors try to edge each other out in the social media space (or one excels while the other one totally flops). This semester, one of my students went above and beyond what was required of the project. Instead of just doing his observation and own evaluation, Rich Radford decided to contact the companies’ social media team in order to get a first-person perspective on why they do what they do. It was not easy, as his story will tell. But with his journalist background, he persisted and eventually got to speak with WeightWatchers’ social media director Lauren Salazar about the company’s social media initiatives. Below is a guest post from Rich about his interview.

WeightWatchers Key

Image by Flickr member slgckgc | CC 2.0

Note added on April 17, 2012:

After posting Rich’s guest post yesterday, I received an email from Lauren Salazar describing the circumstances under which she agreed to the interview with Rich. Apparently there has been a misunderstanding. She shared information with him with the pretext that it is for his class project only and that the information discussed would not be shared publicly, such as through a blog like mine. Because of this prior agreement, I have decided to honor WeightWatchers’ request and remove Rich’s post.

My take on all this? I still think Rich did a fantastic job trying to reach out to the companies themselves (and he wrote a really engaging post too). What’s interesting from all this is that, even though we think of social media as an open space, it is still sometimes too open to be comfortable for companies. There is still a lot of this “eggshellish” mentality, either from an individual perspective or from a company perspective. With the severe consequence that can result from a single sentence (or word) one says in social media, it is understandable why this eggshellish mentality may be the case. Even in personal interaction, there are often implicit but well-known boundaries of what you would disclose about yourself and what you would not. I think that, for many, this boundary in the context of social media is still very hazy. It is something that will need to be more firmly established for both companies and their employees in the near future, if social media marketing were to rise to a more central role in the enterprise.