Tag: business strategy

Building Loyalty Program Partnerships Wisely

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In less than two weeks from today, Plenti, a coalition loyalty program, will officially shut down. Created by American Express three years ago, Plenti had an impressive roster of partners, at one point including Macy’s, ExxonMobil, Rite Aid, Hulu, Expedia, among others. Despite its high-profile start, the failure of Plenti shows the many challenges associated with loyalty program partnerships. If you ever consider loyalty program partnerships, it is important that you do so strategically and judiciously.

The Business Case For Loyalty Program Partnerships

On the surface, loyalty program partnership is a great idea. It allows consumers to earn points from different businesses, making reward earning easier and more relevant to more consumers. This expands the potential market for the program. Running a joint program reduces the operational cost for each business. In the case of a dominant business-peripheral business partnership (such as the partnerships airline frequent flyer programs form with smaller businesses), the dominant business can make good money selling its program currency to its partners. Airlines, for example, are estimated to make between 1.5 and 2.5 cents per mile. With all these benefits, what could possibly go wrong? Continue reading “Building Loyalty Program Partnerships Wisely”

Do You Need a Loyalty Program?

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The most recent Loyalty Census from Colloquy pegs loyalty program membership in the US at more than 2 billion, up 16% from 2008. Perceived value of points earned through loyalty programs is estimated to be $38.83 billion. With this much activity going on, you may be tempted to offer a loyalty program for your business too. But do you really need a loyalty program? I’d like to address this question in this post. Let’s start by taking a look at the pros and cons of having a loyalty program.

Key Advantages of Having a Loyalty Program

  • It encourages consumers to concentrate their purchases in your company so that they can reach a reward faster.
  • It increases switching cost so that consumers who have already earned points through your loyalty program are less likely to jump ship to a competitor.
  • Compared with other promotions such as price discounts, a loyalty program incurs delayed promotional cost, because consumers make purchases first and get rewards later only after they have accumulated enough points.
  • Related to the above cost issue, not all points earned through a loyalty program translate into reward costs, as there will always be some consumers who never reach the reward threshold or who never redeem their points.
  • A loyalty program offers a way to capture consumer transaction history and can lead to more in-depth understanding of your customers.
  • If you have a sizable business such as an airline, a loyalty program can be a revenue source as you can sell program currency (e.g., miles, points, etc.) to partner businesses.
  • A loyalty program, when properly designed, can make your best customers feel appreciated and become more loyal.

    • Continue reading “Do You Need a Loyalty Program?”

A ROI-Oriented Social Media Strategy

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When social media were first established as a marketing tool, businesses treated it with an experimental mentality, trying to figure out what works and what does not work. But as social media start to reach a mass market of consumers and more businesses are adding their Facebook pages and Twitter accounts everyday, poking around with social media is no longer sufficient in bringing a competitive advantage. Instead, it is time to consider a well-thought out social media strategy, as Brian Solis argues well in his blog that a company’s social media elements need to be part of a master plan. Here, I go one step further and argue that, simply having a social media strategy is not enough; it is also necessary to incorporate ROI into the strategy, in what I call a ROI-oriented social media strategy. This is different from running a social media campaign and then figuring out how to measure its return as an afterthought. Instead, ROI is an explicit element of the strategy right from the start.

Why ROI-oriented social media strategy?

Because it is a sound business decision. Just like savvy investors who would not jump into the market without a target in mind, a company’s social media strategy should not be without the guidance of clearly-defined returns. After all, if social media spending are to increase as fast as 34% a year, as Forrester Research predicts to be the case between 2009 and 2014, it is important to know that that money is not just thrown away to chase after some fad.

Social Media Growth

Photo by Flickr user Mike Manuel | CC 2.0

Another advantage of having a ROI-oriented social media strategy is company internal support. Continue reading “A ROI-Oriented Social Media Strategy”