Aimia New Zealand's Blog

Retail growth of 8% to 30% per customer from data driven marketing

2012-01-25T15:47:00.000+13:00

Retailers have been bombarded with approaches from the raft of daily deals companies that are following the Groupon model. These require deep discounts to be offered and for all customers to be treated the same - same offer, same time, same channel. While these certainly have their place we're seeing retailer fatigue at this one-size-fits-all approach.

There's another way. Not surprisingly - an approach that treats different customers differently is working well for retailers in the USA. To do that at scale requires a customer data driven strategy. There's a new breed of marketing pioneered in the USA called transaction driven marketing. Customers credit and debit card transactions, possibly the richest source of customer buying behaviuour available, are mined on behalf of retailers. Retailers are able to select target customers more accurately than perhaps any other method is capable of. They can address customers who have shopped a competitor more than them or have not shopped them recently. Customer data is anonymous and not handed to the retailer. The retailer then makes an offer to those customers (and not anyone else) which is presented inside the customer's online banking screen; some of the most trusted and highly use online real estate. To redeem the offer (usually a cash back) customers need only use one of their payment cards at that retailer in the offer period. If they don't - the retailer doesn't pay.

Today the largest bank in the USA - Bank Of America - launches this offering under the banner BankAmeriDeals. It's delivered by Cardlytics - a US based leader in merchant-funded transaction-driven marketing for electronic banking (full disclosure : we Aimia own a minority equity position in Cardlytics and have a long-term global strategic alliance with them). Cardlytics reaches almost 70% of the USA population with these offers.

New Zealand lends itself as a prime market for this type of marketing. We use our credit, debit and Eftpos cards more than almost any other country and we're high users of online banking.

Most importantly though the results from transaction based marketing are excellent. Cardlytics released their 2011 aggregate results at the National Retail Federation's (USA) Big Show two weeks ago.

Targeted, data driven offers are producing sales lifts of between 8.5% (current customers in Apparel) and 30% (new customers in Specialty Retail). Mining and refining customer data has produced a new industry in which the bank, the customer and the retailer all win.

Smartfuel innovation inside the AA Rewards coalition scheme

2011-11-11T14:44:00.001+13:00

AA Rewards - New Zealand's number two coalition loyalty program behind Fly Buys - has struck a partnership deal with innovative loyalty start up Smartfuel. The deal means that AA Rewards points will disappear and the currency and rewards in the AA program will become accumulating fuel discounts. AA Rewards members (and non-Members - see below) will now accumulate cents/litre discounts at AA Reward's participating retailers. For instance a member might earn 3c/l at TelstraClear, 4c/l at Hammer Hardware and 10c/l at Take Note during the course of a week. This accumulates to a 17c/l discount when the member next fills up at BP or Caltex.

Non-members earn too

We first met Smartfuel early last year when they were building out a pilot of their program in Palmerston North. The program launched on Monday of this week. I spoke to Smartfuel's GM Ian Sutcliffe yesterday. He said that not only was the current AA Rewards base going to benefit from this deal but those not paying an annual AA membership would also benefit (though at a lower rate). This gives anyone the opportunity to participate.

Ian Sutcliffe of Smartfuel

Picture rights : MURRAY WILSON/Fairfax NZ

Richness, relevance

We know that members in the loyalty programs we operate improve their participation in the program in direct proportion to the increase in:

The richness of the rewards being offered - the more you give back the more they'll spend with you, longer they'll stay a customer and more they'll recommend you
The relevance of those rewards - the closer the rewards on offer are aligned with what they want, the harder they'll work to attain them.

Also - you have to have a match of both richness and relevance (one without the other will fail). One criticism that's been leveled at Smartfuel is that the rewards are only fuel discounts and therefore will struggle on the relevance continuum. That's possibly true but remember New Zealand has one of the highest rates of car ownership in the world so most people need to buy fuel regularly. Looking at richness, Smartfuel seems to be offering more in some areas (not necessarily all) than comparable schemes. For instance a WOF transaction at AA earns the member 30c/l discount. With fuel at over $2.00, 30c/l off a $50 WOF is about a 30% discount. Most retail programs offer less than 5% so this is pretty healthy.

Judging whether Smartfuel is rich enough or relevant enough may be missing the point though. Their addition to AA Rewards program is a catalyst that makes the AA Rewards program far more valuable to their existing members and their existing retailers.

Education of the customer base

One of the big issues that Smartfuel is addressing is the education of customers into the accumulating portion of the program. Kiwis are used to collecting cents/litre offers from their supermarkets but not in rolling them together over 3 or 4 grocery visits into a single larger discount for their next petrol purchase.

How Generation Y will reshape customer loyalty

2011-10-14T16:44:00.000+13:00

Generation Y are skeptical of the location-based offers thatpop up on smartphones but (not unsurprisingly in the era of over-sharing onFacebook) will reveal personal details for fast, free and easy rewards.

Gen Y (or Millennials) are a fair portion of the globalpopulation today at 1.7billion strong (there’s more of them than there are BabyBoomers and three time as many of them as Gen X). We’ve completed a proprietary study in the USA,UK and Canada (with possibly markets closer to home to follow) on thisimportant market segment.

In all markets we’ve found that Millennials are active in loyaltyprogrammes (75% participate and they’re more willing than their parents to doso) and 75% of them will prefer a brand that gives offers a programme over onethat doesn’t. In unprompted responses, Millennials rate loyalty rewards as thetop incentive they look for in exchange for sharing personal information withmarketers.

Millennials are willing to promote brands or productsthrough social media in exchange for rewards. This doesn’t extend to them wanting to receive location based offers ona smart phone (only 10% have responded to these offers). They do however (25% of them) want theirsmart phones to be a replacement for a plastic loyalty programme card and forthe loyalty programme to deliver coupons or gift cards through the smartphone. Only 10% though want the smart phone toreplace their credit or debit card.

The first part of the study covering the USA is available for download from Aimia.com.

Rick Ferguson, Aimia's VP Knowledge Development lead the research and presented it in Sydney this week at The Customer And Loyalty Show.

Rick Ferguson - Aimia's VP Knowledge Development - presents the Millennial Research in Sydney this week.

"Millennials are even more willing to participate in loyalty and reward programs than their parents, but they expect reward programs to be free, easy and fast," said Rick. "This generation also relies heavily on outside information to make purchase decisions—information that is often out of the realm of control for marketers. The winners in building sustainable brand loyalty with Millennials will be those who break through the information overload to deliver value at the level of the individual customer."

We have re-branded as Aimia - Inspiring Loyalty

2011-10-10T14:08:00.002+13:00

On Thursday the 6th October 2011 Carlson Marketing changed it's named globally to Aimia.

Carlson Marketing has been operating in New Zealand for over 30 years and we're trusted by some of the country's largest companies and brands to manage their customer, staff or channel loyalty programmes. There are 1.5 million Kiwis in the the loyalty programmes we manage in New Zealand.

In 2009 we were acquired globally by Canadian based Groupe Aeroplan (GA) - a global loyalty programme powerhouse. GA had already acquired the equivalents of New Zealand's Fly Buys coalition programme in Nectar (UK), Air Miles (Middle East) and Aeroplan (Canada). They also owned one of the UK's leading loyalty and retail analytics companies in Loyalty Management Group.

We've spent the last 2 years integrating with our sister companies in the GA fold. GA have expanded further around the globe with Nectar launching in Chile and Italy and investments in Club Premier (Aeroxexico's Frequent Flyer Programme) and Cardlytics (the USA's leading card transaction based marketing company). They have also won the leading Australian supermarket Coles as a customer for loyalty analytics services.

Today we are Aimia. Our new name cements the integration of our businesses into a global loyalty marketing leader. Aimia is modern and distinctive and resonates in many languages.

There is dialogue and movement within the name itself. The creation ofAimia was inspired by palindromes – words that read the same backwards andforwards, as they give the sense of two way conversation, a clear reflection ofour approach to delivering value to our customers and consumers.
It alludes to pinpoint precision – where two aims cross over. Whetherit’s the sweet spot where the needs of clients and the wants of consumersoverlap or the insight garnered from two different vantage points.
It is inspired from the word ‘aim’: highlighting focus and precision,describing our expertise in targeting the right consumers with the rightmessages. It is also from the Frenchwords ‘aimer’ or ‘ami’ emphasizing the importance of partnership andrelationships and denoting a friendly tone and approach.
The symmetry of Aimia mirrors the balance and partnership that sits atits core. A crosshair of aims, a meeting of minds. We see relationshipsdifferently.

We have over 3,700 Aimia colleagues in 20 countries around the world of which approximately:

1,885 are in Canada
850 are in the US
650 are in the Europe, Middle East and Africa region as well as inSouth America
475 are in the Asia-Pacific region

In New Zealand we are the same team with the some commitment to our client's success. We will be transitioning over to Aimia during the remainder of this year.

Retailer offers delivered inside online banking - our new partnership.

2011-09-19T15:20:00.000+12:00

Last week our parent Groupe Aeroplan announced that it had signed a long-term global strategic alliance with Cardlytics, a US based leader in merchant-funded transaction-driven marketing for electronic banking. Groupe Aeroplan has also acquired a minority equity position in Cardlytics for total cash consideration of US$23 million.

Cardlytics’ solution is ground-breaking in the world of marketing. Cardlytics leverages individual financial card information, captured and secured behind the financial institutions’ own firewalls, to provide consumers with personalized merchant offers. These highly targeted offers are delivered directly to the consumer via trusted electronic banking channels including mobile, email and on-line banking. The company’s proven technology solution is uniquely designed for banking offering maximum security for the protection of customers’ personal information. In addition to providing participating retailers with a targeted and measurable channel, Cardlytics provides valuable analytics services to help understand where consumers are making their buying decisions.

Cardlytics Video - describes Cardlytics ground breaking solution.

“This transaction allows us to further complement our full-suite loyalty services offering within the important financial services sector,” said Rupert Duchesne, President and Chief Executive Officer of Groupe Aeroplan. “Our alliance with Cardlytics will also give us invaluable access to top retailers around the world and is in line with our strategy of making small strategic investments in the data, mobile and digital spaces.”

“Cardlytics brings a solid track record and international reputation among leading retailers and
financial institutions, in addition to a highly trusted and reputable technology solution,” added Duchesne. “We look forward to working closely with Cardlytics in the nascent but fast moving space of transaction-driven marketing.”

Through their long-term global strategic alliance, Groupe Aeroplan and Cardlytics will further grow Cardlytics’ offering outside the United States.

“Transaction-driven marketing is a uniquely powerful solution for retailers and financial
institutions,” said Scott Grimes, Chief Executive Officer of Cardlytics. “Today, we can reach 70% of U.S. households in conjunction with our financial institution partners. Our deep strategic alliance with Groupe Aeroplan positions us to rapidly establish the same leadership position in
other major markets.”

Socialnomics Revolution 3

2011-07-04T14:29:00.004+12:00

Erik Qualman yesterday updated the Social Media Revolution YouTube video which, once again, reiterates the growth of social media in the world.

What does this mean for Loyalty Programmes? It means serious adaptation is required to ensure the customer remains engaged.

The Ford Explorer Facebook launch, which generated more traffic than a Super Bowl advert, reiterates the opportunity for engaging with customers utilising alternative media channels. This combined with the 80 million Farmville Farmers across the world, reiterates the untapped Gamification opportunity.

What Gamification shows us, is not just a new way to encourage consumers to shop with you, but the importance of how those consumers engage with you outside the bricks and mortar. With 90% of consumers trusting peer recommendations versus 14% trusting advertising, marketing investment needs to be focused on encouraging consumers to share their positive experiences and to reward them for doing so. Because your customers are talking about you, whether or not you have a dedicated Facebook page, Twitter or YouTube account. So you can either leave it to chance, or, like Starbucks with their MyStarbucksIdea.com, you can get involved with your consumers to help grow your business

"Prehaps sizes could be in, you know, English?"

Bob Pearson, Dell's VP of Communities and Conversations says it all - "Is it better to listen to tens of thousands of customers’ vote on ideas, discuss them and participate with them over a period of a couple of months, or get 10 customers in a room, feed them sandwiches and listen to them behind smoked glass?"

Digital marketing technology – the best thing since sliced bread?

2011-06-14T14:11:00.004+12:00

I recently attended the Shopper Marketing conference in Sydney which featured speakers, workshops and case studies on how to best drive sales, engage shoppers and subsequently influence their purchasing power while in store.

One consistent theme at the conference was that digital marketing technology is the latest trendy must-have for retailers and manufacturers. From iPhone apps, digital billboards and interactive LED screens, digital was touted as the next best thing.

However, many of the opportunities lacked a strong business case and ROI - primarily because the core foundations of new product development were missing. This means for marketers - beyond the "cool" factor, the ability to get a solid ROI out of the innovation is missing.

It's a good reminder, whether working with loyalty programmes, promotional communications, or iPad apps, to look beyond the trend to ensure that the opportunity;

meets a need that a customer has yet to realise they have (if not meeting an existing need);

relates to your product or service and the purpose of your business;

tells you something about your customer that you can use in your business;

is difficult for your competitor to replicate.

And don't forget, if your customer service is poor, your product unappealing or the pricing is wrong, the coolest app will not save your sales.

Loyalty expert Nathalie Moolenschot joins us from Air New Zealand's Airpoints

2011-04-29T14:30:00.004+12:00

We're very pleased to have Nathalie Moolenschot join our team from Air New Zealand Airpoints. We've known Nathalie for some time and she claims to have been through a 10 year job interview to join us as our Strategy & Rewards Services Director.

She has a history steeped in the best of New Zealand loyalty programmes. We first met Nathalie in the 1990's at Westpac where she worked on their hotpoints loyalty program (our client for the last 11 years). She moved over to their then new joint venture with the Red Sheds - The Warehouse Financial Services - and drove card acquisition (and we're fortunate to be able to count Warehouse Financial Services as a client since 2009) . She moved to BNZ to work on their loyalty programmes - Fly Buys and GlobalPlus (their partnership with Air New Zealand Airpoints). Finally she joined Air New Zealand where she launched the Fly Buys and Air New Zealand Airpoints partnership ( a world first).

Nathalie says “I’m excited to be working at the forefront of loyalty. With the continuous pressure on companies to achieve results, my role will be to make sure that we continue to help our existing and prospective clients develop effective and dynamic loyalty propositions to exceed those targets. I will also keep challenging the traditional loyalty program concepts with innovative solutions regardless of industry. This focus will also benefit our suppliers as we develop partnership models moving forward”.

She'll also be sharing here thoughts here on our blog.

Driving better returns from retention dollars

2011-04-08T15:06:00.004+12:00

M1 Telecom - Singapore's smallest telco lost more customers this year than last year - 33% more customers to be precise (their customer churn rate increased from 1.2% per month to 1.6% per month). This on the back of a retention budget that increases 12% in 2008. Not the kind of result they were likely expecting.

Customer retention expenditure needs to be focused and disciplined. Sutowu of Carlson Marketing Asia Pacific has outlined a disciplined investment taxonomy for retention dollar investment.

Our man Sutowo is based in Singapore - he's responsible for our Decision Science Services in Singapore, Malaysia, India, Japan and Hong Kong.

Published in the Marketing Institute of Singapore's April journal issue, Sutowu's model relies on 3 pillars :

Customers need to be targeted at the right time
The right customers must be selected in the targeting
They must receive the right offer or value (which in our business is often driven through a loyalty programme)

All of this is underpinned by frequent Test and Learn programmes.

Sutowo's full article is available here.

Gamification - what loyalty programmes should have been delivering?

2011-03-15T11:35:00.007+13:00

The gamification of everything is afoot. Gamification (also known as Funware) is about integrating game mechanics, such as say leader-boards, into non-game environments such as marketing campaigns and health care.

Gamification definition care of Strategic Synergy

The movement is largely lead by professional game designers from the video and online games industries. One of the first industries they've latched onto as examples of games outside of the video game industry are loyalty programmes. These programmes have "points" to keep score with, members can "level up" to more exclusive tiers and pick up "powers" such as airline lounge access while redeeming for rewards along the way.

Gabe Zichermann's view on loyalty systems

But according to these game designers - loyalty and frequent flyer programmes are not always particularly well designed games. They don't do a good job of engaging members on the journey towards redeeming a reward. Gabe Zichermann is one of gamification's leading gurus and he proposes a fifth P be added to the marketing mix - Pleasure. He describes marketing's task today as "creating a long-term engagement with the consumer that moves them along what we call, ‘the player journey’ – the long-term emotional engagement of the user with the brand.”

In Zichermann's motivational hierarchy gamers are after four things in decreasing order of importance and notably for programme operators, increasing order of cost to the provider:

Status
Access
Power
Stuff

Status, access and power are areas that frequent flyer programmes excel in. Higher status members can clearly be seen accessing the faster queues, priority check-in and better lounges. Status is only status if it's visible to others. At the same time - most airline frequent flyer programmes offer only elite status and "leveling up" for their very top members. If they were to offer a member early and multiple opportunities to climb through status tiers, they'd be more like games and, according to Zichermann, more engaging.

Stuff in all loyalty programmes are the rewards offered in exchange for points which have a hard cost to the loyalty programme provider. Stuff though is only accessed at the end of the loyalty cycle after much accrual and its impact is trumped by status, access and power.

It's hard to imagine a loyalty programme that reduced the value of the stuff on offer in exchange for more status but one has just launched in the hotel sector. The Global Hotel Alliance is offering a loyalty programme without points but with very clear status, access and power. They have Gold (1 night stay), Platinum (10 nights) and Black (30 nights) tiers to enable early and easy leveling up. Each tier provides progressively better access from free internet at 1 night to surf lessons or helicopter tours for Black.

A well gamified loyalty programme would become a reward in itself. According to Zichermann "It’s the system that’s engaging, not the reward” he says. “That’s what game designers know really well, and this is what gamification is unveiling to the marketing world.”

1 COMMENTS:

Jeremy Sweetman said...: Thank you Simon for your informative article.

Coming from a long heritage of digital communications and (more recently) game design, I'm excited to see the evolution of gamifying one's brand becoming popularized within the media.

As a practitioner, I was lucky enough to attend one of Gabe Zichermann's talks recently and, unquestionably, the concept of gamification couldn't ask for a better advocate. Obviously Gabe isn't alone in his promotion; personalities from both gaming & marketing circles are starting to validate the process of gamifying both brands and experiences.

Honestly, as marketing professionals, the concept of changing (customer) behaviour through 'fun' activity is not new, although despite 'The Horizon Report - 2011' predicting 2-3 years before the concept becomes mainstream thinking (particularly in education), I believe pioneering in this area will ultimately return significant gains and deliver better experiences all round.

Simon, as a leading practitioner within your field, I'm curious how you would evaluate whether brands would be suitable candidates for a gamified experience - beyond the currently accepted loyalty paradigm?

In addition, I'm conscious that circumstances could exist where a gamified experience could ultimately over-shadow the value of the 'thing' being sold e.g. Jet Blue and (in my opinion) Nike+. Hence are interested on your thoughts surrounding this potential scenario?

Thanks in advance for your insight.

Jeremy Sweetman; MARCH 17, 2011 4:47 PM

February 10th - We present international mobile marketing case studies at Auckland's AmCham

2011-01-18T16:58:00.010+13:00

We at Carlson Marketing count ourselves fortunate to have been trusted by our international clients to mobilise their businesses through apps, smartphones and mobile sites over the last few years. We'll be sharing some of our key learnings at the American Chamber of Commerce in Auckland on February the 10th.

Doug Rozen (our Senior VP Creative, Interactive, Media & Mobile based in the USA) will present a working model built up through his hands-on operational experience. He'l specifically discuss case studies from our clients:

AT&T - a leading USA based Telco
Coca-Cola - their new direct to customer strategies
Amtrack - a leading US rail network
The UK’s Nectar loyalty programme (Nectar is our sister company).

He’s a frequent speaker at mobile marketing events and most recently presented at ad:tech in New York.

Doug Rozen presenting at last year's loyalty conference in India

According to Doug "Around the world there is significant consideration and investment being placed in mobile marketing. The mobile channel offers not only a means to distribute marketing messages to customers on the go but also provides a litany of tactics. While many marketers are focused on the technological marvels that can be achieve through apps, there is a rising opportunity and more importantly a customer demand to add mobile as part of multi-channel CRM initiatives".

Doug Rozen interviewed at ad:tech in New York in November 2010

Date : Thursday the 10th February

Place : The University of Otago House, Street Level, 385 Queen Street Auckland

Time : Registration 3:45 pm

Presentation 4:00 pm

Refreshments 5:00 pm

Concludes 6:30 pm

If you would like to be our guest at this event please email me at simon.rowles@carlsonmarketing.co.nz or call on (09) 524 1122

Rick Ferguson leaves Colloquy and joins our family

2011-01-17T10:30:00.004+13:00

Rick Ferguson, most recently Editorial Director of Colloquy has joined our parent Groupe Aeroplan as Vice President Knowledge Development.

Rick picks up a role as thought leader for our group. If you've been to any of the key loyalty conferences in the Asia region or further afield including the USA, Europe and Canada - you'll likely have heard Rick speak. You've probably also read his analysis of our loyalty industry in the weightier publications such as the Wall Street Journal, Forbes, Fast Company and others where he is quoted as a loyalty marketing expert.

There's two major trends we've seen developing in our market that Rick has recognised and analysed on the global stage.

The first is the struggle that travel loyalty programs had in retaining both members and their engagement during the recession (while the opposite has been proving true in other industries, especially retail) . We saw Airline Frequent Flyer and Hotel Frequent Stayer Programs, along with the capital intensive industries they represent, struggle in 2008 and 2009 (and even into 2010). Quoted in AdWeek , Rick commented that “The disparity between travel and the other two industries featured in our latest research mirrors the shift in consumer spending away from the travel sector, in which both business and leisure travel have seen cutbacks, and toward retail categories, particularly in the everyday spend categories of grocery and fuel.”

Rick has also contributed some excellent analysis on another key trend that's evolving and beginning to mature in our market : the targeting and engagement of brand advocates through Word of Mouth. We define Word of Mouth as the output from a brand advocate. It's the opposite of Amway. Customers will recommend a product or service to friends and family not because they get a reward (or more sales as they would in Amway) but because they believe it's the best product or service. (The Net Promoter Score is a good way of determining who is a likely WOM candidate). Rick commented in Adweek that marketers “should find brand champions buried within their program memberships, and build relationships that reward them for positive word-of-mouth activity.”

Rick's thought leadership and deep experience is going to be let loose on a (now) very wide range of our metrics, data, experience and learnings.

Code-On-Pack loyalty programme success for Coke and P&G

2010-12-16T11:51:00.009+13:00

New Zealanders have long been keen collectors of loyalty points for everything from their retail shopping to credit card use and airline flights. The success of these programmes has seen them quickly added to the arsenal of FMCG marketing professionals. But it’s not just entrepreneurial grocery brands at the bleeding edge of the new wave that are adopting loyalty programmes; the core of the FMCG market has recognised their value, with two multinational companies, Coca-Cola and Procter & Gamble, leading the charge. Both are our clients.

So what makes these programmes so valuable for those implementing them? It all boils down to data— actual customer transaction information on who bought what, when, where and for how much—that can then be used to determine which people might be enticed to buy next, and craft one-to one communications to get that sale.

From Flat to Fizzing

Many soft-drink brands are caught in the feast-or famine cycle of traditional promotion marketing. And the indiscriminate impact of these promotions leads to unpredictable market share lifts and losses across key segments. In both Britain and the US, Coca-Cola found itself in a cycle of price promotions with no increase in sales revenue or customer loyalty. What’s more, those programmes became increasingly expensive to plan and execute.

In the UK, Coke dealt to this with one of the best customer loyalty programmes of its type. The aim was to keep customers engaged between promotions to keep sales buoyed. We were able to leverage the Coca-Cola brand equity along with a large customer database to secure some enticing reward offers. Its customer loyalty programme, Coke Zone, is a real-world equivalent of click-throughs.

Unique codes are printed inside the labels of all Coke bottles and multi-packs. Consumers enter these online or via text and, in doing so, create a continuous transaction history and picture of who they are. Coke can then tailor its marketing and offers accordingly. The result was increased volume year-over-year, with loyalty communication offers rising to an open rate of 49% and a click-through rate of 71%.

Coke has redefined how a loyalty programme website should work. So many consumers are now entering codes that Coke Zone is the most visited FMCG website in the UK. It has eight times more visitors than Pepsi and they spend ten times longer on the Coke site than its rival’s portal.

Redefining Online Rewards

Coca-Cola faced a similar situation in the US. Its existing points-based programme was expensive and lacked a sound rewards and communications strategy. The My Coke Rewards ‘build-it-and they- will come’ approach to consumer engagement was more than just a bad assumption—its old rewards strategy was not financially sustainable.

The programme was reworked and its re-energized version saw a 16.8% increase in code entry online. Logins to mycokerewards.com increased their open rate by more than 220%, indicating multiple logins, and the rise in code-entries-per member reached 108% over the control group.

A more refined approach

For another of our clients, Proctor & Gamble in the USA, refining its already effective customer-loyalty strategy delivered better results. The manufacturers of Pampers nappies, Proctor & Gamble had tested loyalty marketing and knew the strategy would work. Again, customers went online to enter unique codes printed inside each Pampers pack. The challenge was to refine the strategy and improve the programme. Using data already gathered allowed P&G to intervene at vulnerable switch points where a customer might be tempted to move to a competitor’s brand, and also at key points in their relationship with the Pampers brand. Because Pampers products are only relevant to consumers for a short period of time, the aim was to maximise that timeframe and build a relationship with parents. Carlson’s solution took the best of what airlines and credit card companies had already learned and applied it to the technology platform, consumer experience, rewards, partners, segmentation and trigger communications. The outcome has been improved results for Pampers on all fronts. Active participation among consumers has increased by 20%. The efficiency of the programme’s rewards budget improved by 10 percent and the overall ROI rose by 12.5%.

Our results for our CPG clients:

21% increase in share amongst participating consumers
12.5% volume increase year on year
Revenues from strategic partnerships

[First published in New Zealand Marketing Magazine in December 2010]

RESPONSES

1 COMMENTS:

Phil Hawkins said...: So the question is, are product-specific programs such as Coke Zone sustainable in this neck of the woods? I can only presume that lack of scale has prevented Coke undertaking anything similar to date in Australia or New Zealand? There are a few eyes in Australia on the recently launched
Nescafe Cup of Rewards program. It will be interesting to see if the average household's instant coffee consumption is enough to garner interest in the program, discussed further here.; DECEMBER 16, 2010 4:13 PM

Air New Zealand's Airpoints innovations (again)

2010-11-30T20:24:00.010+13:00

Air New Zealand has recently delivered a comprehensive renewal of the Airpoints Dollars Frequent Flyer scheme. While it follows similar actions by Qantas Frequent Flyer in Australia it is a very Kiwi and innovative solution.

First mover - Qantas in Australia

Air New Zealand's new innovations follow moves in Australia by Qantas over the last 3 years. Qantas first signaled a partial listing of it's 5 million member Frequent Flyer Programme in 2008 which could have fetched it AU$1.5billion (for many airlines there's more money made in the frequent flyer scheme than in flying planes). The listing strategy was based in large part on Carlson Marketing's parent Groupe Aeroplan's success in Canada according to Simon Hickey - boss of Qantas Frequent Flyer in 2008. Qantas changed tack, held onto ownership of the Frequent Flyer programme, (which produces more profit than subsidiary Jetstar) and took it on an aggressive expansion drive.

Most frequent flyer programmes struggle with too many points being issued (typically by partners such as credit card companies and at a a compound annual growth rate of 10%) and not enough seats being available to redeem them (new planes add only 5% more seats to the global fleet per annum).

Qantas first addressed the redemption options from difficult-to-find-free-flights to include an online store stocked with merchandise and gift cards (full disclosure - we deliver this service for Qantas) and an any-seat, any-Qantas-flight redemption options. It then required all banks who were offering Qantas Frequent Flyer points on their credit cards along with other rewards to offer cards with Qantas Frequent Flyer points only (know as Direct Earn credit cards) - or not at all. Then last year it struck a deal with Woolworths Australia in which Woolies offered Qantas points to its shoppers and along the way added 700,000 new Qantas Frequent Flyer members.

The result? Depending on who you talk to either Qantas or FlyBuys is now the biggest and best loyalty programme in Australia. Either way - FlyBuys has a new attacker. And for Qantas it's a big earner : in the year to June 30, it generated underlying EBIT of A$328 million and now has a base of 7 million members.

Air New Zealand's strategy here

Air New Zealand didn't face the issues of limited seats being available for redemption in its Airpoints programme. In fact it could be argued that anything that got passengers onto it's planes was positive with the Centre For Aviation describing them as a "small airline getting smaller". The world first Airpoints Dollars innovation introduced a few years ago means any seat on any Air New Zealand flight could be bought with Airpoints (rather than the roughly 3%-5% of seats reserved per plane in other classic frequent flyer schemes).

Air New Zealand's advance in 6 steps

Flying on Air New Zealand flights had always gave customers Airpoints Dollars which could be redeemed for..
...more Air New Zealand flights.
BNZ had long issued the GlobalPlus credit card on which customers earned even more Airpoints Dollars. ANZ (our client), Kiwibank and American Express have all issued new Airpoints Dollars credit cards over the last year.
Then recently - Air New Zealand enabled Fly Buys customers too to convert their Fly Buys points to Air New Zealand flights.
The really interesting piece has been the issuing of a new Airpoints membership card last month which is co-branded with Fly Buys by Air New Zealand. With this Airpoints card customers can now earn even more Airpoints Dollars (earned instead of Fly Buys points) at any of the Fly Buys merchants. This is a significant innovation and not one we've seen elsewhere. It's a collaborative local solution which is in contrast to the development of Qantas's programme in Australia.
The unexpected piece has been last week's release of an online Airpoints gift store. Airpoints Dollars can be used to buy goods and gifts from a $50 digital camera up to a $1,670 high end camera. Some goods are delivered in the same fashion as Fly Buys such as the new iPod Nano which must be picked up in store from Noel Leeming.

There are strong arguments in Australia to support the primacy of either Qantas Frequent Flyer or FlyBuys. In New Zealand - it looks like Air New Zealand's trumped them all.

New generation fuel rewards - the Smart new orange card

2010-11-05T15:46:00.012+13:00

While we're all now used to fuel dockets in New Zealand we may soon have a better alternative available to us. It's the result of solid Kiwi entrepreneurship together with some solid marketing discipline.

Australia - 1

Woolworths Australia (who own Countdown and the rest of the Progressive Enterprises stable here) were offering fuel dockets (as we currently have here in New Zealand) successfully in 2005. At the Caltex Woolworths sites there was an average 80% increase in petrol sales. When the offer was 12 cents per litre, sales went "through the roof ". Also - sales appeared to be up in grocery competitor Coles who also offered fuel dockets - maybe as much as 3.8%.

Woolworths Australia have since progressed to offering an orange card which collects the various cents/litre discounts (doing away with the paper dockets) in 2007, launching an online community the same year, partnering with Qantas Frequent Flyer in 2009 and then this week launching a Woolworths Everyday Rewards Qantas Frequent Flyer credit card -with fuel discounts. Pretty impressive customer strategies.

New Zealand - 1 up?

Smartfuel is a Kiwi startup running a pilot programme in Palmerston North. Like Woolworths Australia it offers an orange card that collects fuel discounts. Unlike the Australian example these discounts can be earned at an array of retailers who print the running total of the discount at the bottom of the till slip. They also accumulate into a single large cents/litre discount which can then be used at the next fuel purchase . And there's two major chains participating : fuel discounts can be redeemed at either Mobil or Caltex.

Scott Fitchett (owner of the Caltex in Palmerston North) is the Smartfuel inventor. Ian Sutcliffe is the experienced marketer (previously head of marketing at McDonalds and Westpac and a past 1to 1 Customer Champion). The offer to customers is pretty compelling. So too is the offer to the participating retailers. While they pay for the discount at time of purchase - they don't pay for discounts which aren't used by the customer. These unused portions are credited back to the retailer.

Fuel discounts are not materially costly for the retailers who offer them (maybe a 1% to 2% discount equivalent) but they drive an out sized customer behaviour change. When fuel dockets first became popular one analyst noted that "The discount is worth $1.60. You wouldn't stop in the street to pick up $1.60 but customers are changing retailers for it."

3,000 Foursquare users in New Zealand (maybe).

2010-10-11T14:28:00.007+13:00

On Saturday, the mighty All Whites drew 1 all with Honduras at North Harbour Stadium. The official crowd was 18,153. There were 12 Foursquare users checked-in there ( I checked - I was one of them).

Foursquare had a penetration of 0.0661% of that crowd. If that is true (probably not) and all other factors remain constant (they definitely don't) this implies that 0.06% of Kiwis are Foursquare users. Or : of the 3 million Foursquare users globally - 3,000 are to be found in New Zealand.

Foursquare seems made to be part of a loyalty programme. Air New Zealand's adoption of a Foursquare special attached to it's Airpoints Frequent Flyer Programme almost makes it a mainstream technology in New Zealand. But - it's not. Not yet anyway.

Maybe straight up penetration is the wrong way to view a social tool like Foursquare. In social technologies we know there's a very strong distribution operating. The most voluminous poster in a community posts twice as much as second highest poster and they in turn post twice as much as third highest poster. We also know that the 1:9:90 rule is in play :

1% of people post lots a frequently
9% of people comment on these posts
90% of people do nothing other than read them (and maybe in Facebook 'like" things)

Foursquare check-ins can be shared on Facebook and Facebook is now the biggest site in New Zealand (bigger than Trade Me, bigger than Google). So - maybe sharing by the few to the many is what's important here. And Facebook Places is coming : we'll all be able to share where we are Foursquare style inside Facebook (on smartphones and some feature phones).

In general : we over-estimate the impact of a technology in the short term and under-estimate it's impact in the long term (which I thought was coined by Bill Gates but is actually from the head of the Human Genome Project).

New Zealand credit card loyalty programmes rated by Cannex in their inaugural study

2010-08-31T18:11:00.006+12:00

Cannex - the research company which reviews banking products and gives the best ones 5 star ratings - have undertaken the difficult task of doing the same for credit card loyalty programmes. In their inaugural review in August they rated 33 rewards programmes tied to 44 credit cards in New Zealand.

It's difficult because there's a multitude of variables and special options in these programmes which don't lend themselves to standardisation, but it can be done. To achieve this they've split the rewards cards into 2 main buckets:

General rewards programmes (that give you gift cards, merchandise. experiences, trophies and the like)

Flight rewards programmes - all of which give you Air New Zealand's Airpoints Dollars (they appear to have missed ANZ Bank's Qantas offering)

What's more difficult (maybe impossible) to asses is the benefit to the customer because there are no average customers. However Cannex have done a solid job of identifying two different customers who use these cards :

Those who spend $24,000 per annum on their credit cards

Those who spend $60,000 per annum

The results? The best card in the market if you want General Rewards and spend $24,000 a year is the Warehouse MasterCard. This delivers $137.42 return for that $24,000 spend according to the Sunday Star Times review of Cannex's ratings. [Full disclosure - Carlson Marketing deliver this programme for The Warehouse].

Cannex dished out 5 Star ratings (Outstanding Value) to:

General Rewards - ANZ's World Visa programme and Westpac's hotpoints programme [Full disclosure - Carlson Marketing deliver these programmes]

Flight Rewards - American Express's Air New Zealand Airpoints programme and BNZ's Global Plus programme.

The Sunday Start Times article recommends to card carrying customers that "Rewards should not change your spending habits, even if they change the way you pay". Changing the way you pay is precisely what rewards programmes are designed to do.

Foursquare provides mobile loyalty interactions to established loyalty programmes

2010-07-26T10:29:00.015+12:00

It's taken a while for the mobile phone to to produce exciting innovations in the world of customer loyalty. Finally though there are two key developments that have achieved sufficient consumer adoption that programme operators are including them in their offerings. Both are products of the mobile app stores delivering cool tools to smart phones.

Cardstar

The first and somewhat more mundane of the two is Cardstar

- a smart phone app downloaded over 1.5 million times globally (Apple, Android and Blackberry). Once on the customer's phone - the app stores the bar codes of all the customer's loyalty cards (which can then be tipped out of overloaded wallets). The customer then presents the selected card's bar code on the phone's screen for scanning at checkout.

Foursquare

Foursquare is much more exciting. Its not the first of it's type of service but it's not generally accepted to be the leader with the largest installed user base. Also an app downloaded to a smart phone (and also usable over the mobile web but not as good) - it's a geo-location app that allows customer's to "check in" at retail or other locations by tapping a button their phone screen. Once in you can see which of your friends is there or nearby and what they recommend you try there (it cleverly gets your friends from Facebook). Foursquare awards you badges (on the screen) for various achievements (earn the Newbie for your first check in). You can also become Mayor if you've checked in to a specific location more than anyone else.

It gets interesting when the local coffee shop elects to run campaigns against the customers checking in. Starbucks (USA) awards Mayors $1 off a frappuccino. All they need do is show their Mayor status on the phone to the barista. In fact - Starbucks have their own barista badge to be earned on Foursqare.

Domino's Pizza in the UK cited their use of these

types of Foursquare promotions as a leading driver of a 29% increase in pre-tax profits on July 12th this year.

Pepsi in the USA is also using Foursquare while developing its own proprietary platform called Pepsi Loot based on a form of Foursquare from Zumobi (where Eric Hertz - CEO of Two Degrees Mobile - was before he hit New Zealand). While it's Foursquare play seems solid - Pepsi Loot has been panned for being "Foursquare, minus the cool and built in incentives".

And in New Zealand ?

Foursquare is just over a year old and in March

had half a million users (globally) and 1 million venues registered. It's small. But it's growing fast - it hit 2 million users on 10th July this year (that's 100,000 new users per week) and pulled funding from Marc Andreessen (who invented Netscape all those years ago). Numbers are hard to come by but in New Zealand we estimate everyone has a phone and 2% have an iPhone while 9% have Blackberrys (Android's not really here yet). Also small.

Air New Zealand has been the first (again) to deploy a Foursquare offering. Mayors at our airports get Koru Lounge access or Airpoints Dollars - an excellent programme tie in. Air New Zealand beat the Intercontinental Hotels Group to market with IHG announcing last week that customers in its loyalty programme can also earn points for checking in at the hotel venues globally.

Foursquare is now integrated through Facebook Connect and last week announced tie up with Cardstar. After flashing their loyalty card bar code at the till customers can also check in to the retail venue.

Loyalty programmes have long aspired to be able to reward interactions as well as transactions. Transactions are generally discovered through the payments cycle. This is an example of interactions being rewarded inside the framework of the larger loyalty programme.

Auckland University research : loyalty programs designed to make sure customers don't get rewards

2010-06-18T16:24:00.007+12:00

An article earlier this month in the New Zealand Herald claimed that "Shoppers may be missing out on millions of dollars of savings through unclaimed rewards every year". It referenced research from Auckland University' Senior Marketing Lecturer Rick Starr under the headline "Loyalty schemes rely on shoppers forgetting to cash in their points". Rick's view was that "people often forget to redeem their points. And companies count on customers doing so because full redemption would "cut their profits"".

True - in part. But. It depends what type of program you're talking about. In the programs we operate, the driving principle is to get all the points that have been issued turned into rewards by the customers who have earned them. This isn't some egalitarian approach but a very mercenary one.

[Full Disclosure - the article mentions ASB True Rewards and The Warehouse's Rewards MasterCard - both are programs we work for].

There are two key behaviour changes that occur when a customer joins your performing, well designed, rich, relevant loyalty program.

Behaviour change 1.

The first occurs when they begin to earn points and is particularly marked if you've made them pay a fee or annual subscription to join (always a good idea if possible). For example - credit card customers who join the loyalty program attached to the credit card will almost immediately spend more on that card by a multiple of 2 or 3 times what they were spending on the same card before they joined the associated loyalty program.

Behaviour change 2.

The second and far more significant behaviour change occurs when the customer makes their first redemption for a reward. At this point their spend on the card increases again by a factor of 3 to 8 times their pre-loyalty program spend. This second spend lift is determined by what it is they've redeemed for. Customers who redeem for cash back or against their annual fee don't generally increase their spend markedly after redemption. If they've redeemed for merchandise, gift cards or travel - then the second lift is particularly marked.

Customers who don't redeem don't experience this second lift.

The upshot - redemption is good (very good) and points that don't get redeemed (termed "breakage") are bad. How much breakage is there in New Zealand? Rob Mercer of Forsyth Barr Research reckons it's 10% of all points.

Far from cutting a company's profits - points that don't get redeemed are bad business and a missed opportunity to lift spend for the points issuer.

Wall Street Journal profiles the "Stingiest" airline frequent flyer programs

2010-05-14T09:24:00.008+12:00

In an article in today's Wall Street Journal entitled "The Road to Redemption - Which Airlines Are Generous With Frequent-Flier Award Seats and Which Aren't" some of our locally available airline's frequent flyer programs are profiled.

The article reports on research by IdeaWorks Company on the ease (or difficulty) with which members of airline Frequent Flyer loyalty programs are able to redeem their accumulated airline miles or points for free flights. According to IdeaWorks airlines are "killing these programs by not allowing more reward availability".

The IdeaWorks study was comprehensive making 280 different Frequent Flyer Program seat requests per airline Frequent Flyer Program reviewed (both long and short routes). This amounted to 6,160 queries at 22 airline websites.

The worst performer in the study was US Airways in which only 11% of the requested redemptions could be achieved. The best performer was SouthWest Airlines in which 99% of requested redemptions were available.

The study also included some (but not all - Air New Zealand was not part of the study for example) of the airlines that fly into New Zealand. The best performer for our locally available airline's Frequent flyer Programs was Virgin Blue's Velocity program in which 90% of requested seats were available. The results for the locally available airlines surveyed were:

Virgin Blue's Velocity program - 90% of requested seats available
Singapore Airlines KrisFlyer - 77.1%
Qantas Airways Frequent Flyer Program - 72.9%
Emirates Skywards Program - 36.4%

There are more and more airline miles chasing a flat pool of airline seats and according to the Wall Street Journal the "world is awash in frequent-flier miles partly because airlines have built a lucrative business selling them to credit card companies, hotels and others who use miles as incentives and rewards".

The volume of miles issued for things other than flying is now greater in some airlines than the miles issued for using the airline. For American Airlines in 2009 - 66% of the 175 billion miles issued were through their 1,000 partners (credit card companies, hotels and the like) who pay for them. That rate of issue together with the difficulty customers experience in redeeming them means that the balloon of frequent flyer miles outstanding around the world (currently estimated to be 10 trillion) just keeps growing.

Barclaycard Freedom - the (nearly) new credit card loyalty model

2010-03-31T17:21:00.008+13:00

Barclaycard Freedom launched in the UK this month. It's an unusual model which has been implemented in similar forms in other parts of the world - most notable in our neighbourhood : Asia. BPI bank in the Philippines run this technology as their card loyalty program (called Real Thrills) as do Axis Bank in India (theirs is called Spice Rewards). The technology that underpins these offerings comes from France based Welcome Real-time who have been developing their solution for over 12 years (and with whom Carlson has a Asia Pacific partnership).

The mechanics (there are two) are similar in all applications :

(1) customers of the card company receive segmented offers at point of sale when they swipe their cards. These offers are printed on the till slip and are redeemable either back in that merchant or at another merchant.

(2) Customer of the card company can use their points to pay for their purchase at that merchant (not unlike ASB Bank's True Rewards program here in New Zealand).

The value of the first mechanic (offers on till slips) is clearer perhaps than the second (burning rewards points at the till). Most retailers want to get their customers through the till as fast as possible and any delay occasioned by a new process to redeem points wouldn't be appreciated. Importantly the retailer never knows the name or details of who they're making the offer to. They're simply card X which belongs to segment Y.

Merchants can set up segments of card carrying customer types from that issuer - a "frequent visitor" or a "never been here before" segment for example. These segments get different offers on the till slip. Frequent Visitor might get a "bring a friend for free next time offer" while Never Been Here Before might get a "come back and get a discounted item" offer. Merchants self manage these offers through an web portal.

What's different about Barclaycard's Freedom is that this is the first time this type of solution has been implemented on such a large scale in such a mature and sophisticated card market. The scale is significant. Barclaycard have 8 million customers who will be able to benefit from this solution at a large portfolio series of merchants (30,000 have been invited but less than that are available today). The goal is to have 200 outlets withing 5 miles of each customer making relevant offers.

If it pans out as its intended to then this is a great example of a marketing network in action. The three parties involved all benefit from relevance and richness.

The merchant is able to make different offers to different customers instead of the classic One Size Fits All structures. They don't have to incentivise business they were already going to get.

The customer gets an additional benefit on top of the others they're already receiving which, if the merchant gets their campaign management right, should be differently rich and differently relevant to each of them.

The bank in Barclaycard adds significant value to the near-commodity business of merchant acquiring as well as making their program an order of magnitude (again - if the merchants get their campaign management right) richer than competitor's card programs.

Oracle CRM and Loyalty event in Auckland - Carlson's 10 Loyalty Programme "Must Haves"

2010-03-09T10:49:00.011+13:00

Karl Schuster (president of Carlson Marketing Asia Pacific) presented on loyalty as a business strategy at Oracle's CRM and Loyalty Event event in Auckland.

Oracle's CRM Solution Consulting lead Andrew Davidson first profiled Oracle's offerings in this space. Interestingly, Oracle's customer facing solutions are based on a four core components around a Siebel core. Sales and Service form the expected base and are pretty much table stakes for a customer application. The addition of Marketing tools lift the value of the offering from tactical to strategic. The inclusion of Loyalty as the fourth pillar recognises the importance of sustained customer relationships.

Karl Schuster followed Andrew and addressed a list of best practices that our global clients have implemented or are implementing in 2010. Not all suit all industries and not all necessarily belong together in the same program. However they're a useful starting point.

They are :

1. Multi-channel Quick Enroll : create as few barriers to joining as possible. Ask as few questions as possible when a prospect signs up to the programme. Ask for more data later on in the time of redemption.

2. Preference Center: Where the member manages their communication choices, such as their desired channel, timing, frequency.

3. Member Get Member : Allow the top loyalists in your program to become ambassadors and leverage their own networks to drive acquisition.

4. Multi-channel code submission: is a feature that enables a member to submit an on-pack rewards code via SMS, mobile website, email, web cam or any other channel.

5. Program Dashboards. get all the program data together in one view to be able to assess the performance of your investment (well supported in the Oracle solutions).

6. Instant Rewards: usually for smaller redemption value that drive engagement as an adjunct to the accrual of points. This is also an efficiency play that doesn't have to deal with physical goods.

7. Loyalty program toolbar and widget: Distribution of content and functionality via web browser toolbar or desktop applications.

8. Mobile Program website : The mobile internet is growing faster than than the PC based internet ever did. Customers are trained now to expect ubiquity of access.

9. Loyalty program fan page and feed: Specific fan-based messaging for Facebook, Twitter and others.

10. Dynamic e-Offers: Deployment and overall management of personalized, highly relevant, location based incentives

There are no average customers

2010-02-23T10:36:00.006+13:00

The Sydney Morning Herald carried an article entitiled "Consumers paying high price for loyalty card rewards". The article was based on research from Choice (most likely similar to New Zealand's Consumer magazine). Their research argued that shopper loyalty cards offer "little benefit to shoppers" and profiled the value the key grocery retail programs offered .

An average Australian shopper (according to Roy Morgan Research) spends a mere $156 per week.

To earn a $50 gift card in Fly Buys requires spend of $15,000 at Coles (or think New World in New Zealand). At an average shopper's purchase rate of $156 per week that would take 2 years.

It would be faster at Woolworths Everyday Rewards program (think Progressive Enterprises Onecard in New Zealand) with customers earning the same $50 gift card after $11,000 or 1 year and 4 months.

One could indeed argue that for the average customer a $50 gift card in return for either 1.3 (Woolworths) or 2 years (Fly Buys) worth of dedicated shopping may not be enough return. That's debatable and some of our data would say otherwise.

However the real issue here is the use of "Average". There are no average customers and loyalty programs serve to enhance differences, especially financial ones, between them.

The figure shows an extract from an actual retail program. The customer base is ranked from best (buys the most) to worst customer along the x axis. The y axis then shows total sales from these customers. It's clear that the first few customers produce significant sales and the bottom customers very little.

For instance - the customer base once laid out from best to worst - is then cut into 10 deciles of equal turnover. In this case total turnover is $44m and each of those deciles is worth $4.4m. The first $4.4m of sales (or Decile 1) comes from only 91 customers. Each spends $49,000.

The last $4.4m of sales (or Decile 10) comes from over 42,000 customers. Each of them spends only $104.

Looking at this distribution, different customers are treated differently and top customers get inordinate amounts of value. In return they provide inordinate amounts of sales.

You are what you eat

2010-01-12T12:11:00.005+13:00

There has been a long running loyalty program battle in the UK between Tesco (who were first to launch a loyalty card strategy in 1995) and Sainsburys who are a member of the Nectar coalition loyalty program (which I've written about before here). Much of the reporting about these retailers right now relates to their use and expenditure on their respective loyalty programs.

The battle heated up just before Christmas with Tesco doubling the points customers could earn - effectively doubling the value. Sainsbury's seems ave followed suit this month with an increase in the number of nectar points offered.

Tesco also mailed out GBP 67 million of vouchers in November that would normally have been sent in February.

So - who's winning?

Christmas trading results are due out in the next few days for Tesco but there's a concern that they've not got it right. Some analysts expect that their sales growth will be below that of their rivals. They're also concerned that Tesco will include GBP 100 million worth of loyalty vouchers in their sales figures (though the same analysts suggest that if they do this - decreasing their reported figures by 1.5% will deliver a true reflection of like-for-like sales).

Sainsbury's has already reported better than expected results for the Christmas period. In headlining these results - Sainsbury's CEO Justin King noted that "There will be a big difference between the haves and have-nots, with data. Those with loyalty data can see what customers are doing. If they are going elsewhere for a certain product, we can incentivise them to buy it with us.”

This is language that, in the past, would only have been heard from Tesco and their loyalty program partners dunhumby. In the Nectar program this data is worked by LMG Insight and Communication for Sainsbury (full disclosure : LMG is a sister company to Carlson Marketing. We're both owned by Groupe Aeroplan).

At Carlson we have always promoted the use of data to drive customer programs. The data in question for these two giants of UK grocery retailing is all the food their customers buy. The data that flows from customer's purchases of food is so accurate in determining their future buying habits that, in the words of the team at LMG, "You are what you eat".

We've partnered with Welcome Real-Time for point of sale rewards

2009-12-24T14:50:00.004+13:00

We recently inked a deal with loyalty technology company Welcome Real-time to deliver a combined solution in the Oceanic and Asia Pacific market. It's called Carlson Marketing Point of Sale Rewards and it provides personalised loyalty experience in real time, at Point of Sale (POS).

The solution enables customers to redeem points for purchases at the till (instead of using money) and helps credit and debit card issuers to deliver personalised offers at the point of sale. It provides retailers with a great opportunity to market to their customers through their cards. retailers can treat different customers differently based on the RFM (Recency, Frequency, Monetary Value) of the payment card at their outlets. They don't need to know who the customer is and can provide an automated offer at the bottom of the till slip.

Welcome Real-time has customers in 30 countries and in the past year inked two serious deals. The first is with BarclayCard in the UK and the second with Maritz in the USA. Though not yet launched, these clients will bring Welcome Real-time into the G20 frame.

Groupe Aeroplan Concludes Acquisition of Carlson Marketing

2009-12-17T17:57:00.001+13:00

Montreal, QC – December 7, 2009 - Groupe Aeroplan Inc. (TSX: AER) today announced the

completion of the acquisition of Carlson Marketing, a privately-owned marketing services

provider headquartered in the United States.

“We are pleased to officially welcome Carlson Marketing to Groupe Aeroplan. As stated, the

combination of our companies positions Groupe Aeroplan as the global leader in loyalty

management,” said Rupert Duchesne, President and CEO. “This acquisition provides

immediate geographic diversification and accelerates Groupe Aeroplan’s international

expansion strategy into the G20 countries. Moreover, Carlson Marketing’s solid US presence

secures an important footprint in one of the largest consumer markets in the world.”

Groupe Aeroplan’s existing businesses and Carlson Marketing will continue to operate

separately and independently. Jeff Balagna, President and CEO of Carlson Marketing, and his

executive team, will continue the management of Carlson Marketing. Jeff has also been

named Executive Vice President, Groupe Aeroplan.

Carlson Marketing is widely recognized for its leading-edge global knowledge of loyalty

marketing services, and engagement and events management. It has strong client

relationships, which include some of the world’s most respected brands in important sectors

including financial services, automotive, high tech, consumer packaged goods and

pharmaceutical. Carlson Marketing has a presence in North America, Europe, Asia Pacific and

the Middle East.

Groupe Aeroplan to acquire Carlson Marketing

2009-11-06T15:23:00.002+13:00

GROUPE AEROPLAN TO ACQUIRE
CARLSON MARKETING

COMBINATION CREATES THE WORLD'S LEADING LOYALTY MANAGEMENT PROVIDER

MONTREAL, CANADA and MINNEAPOLIS, MINNESOTA, November, 3, 2009 - Groupe Aeroplan Inc. (TSX: AER), a leading international loyalty management corporation, headquartered in Canada, today announced that it has entered into an agreement with Carlson Companies, Inc. (CCI) to purchase Carlson Marketing, a privately-owned, US-based loyalty marketing services provider for a net purchase price of US$175.3 million (Cdn$188.0 million), including transaction costs of US$6.5 million (Cdn$7.0 million) and subject to certain working capital adjustments. In addition, Groupe Aeroplan expects to incur one-time costs of approximately US$15 million (Cdn$16.0 million), primarily related to the migration of technology infrastructure in the US out of CCI's systems. The acquisition is subject to customary closing conditions and standard antitrust approvals in the United States and Canada. The transaction is expected to close by early December 2009, and will be financed with cash on hand and bank facilities.

Carlson Marketing's solid US presence secures an important footprint for Groupe Aeroplan in the largest consumer market in the world. Moreover, the transaction provides Groupe Aeroplan with immediate geographic diversification and accelerates the company’s international expansion strategy into the G20 countries.

Carlson Marketing is widely recognized for its leading-edge global knowledge of loyalty marketing services, and engagement and events management. Carlson Marketing has strong client relationships, which include some of the world’s most respected brands in important sectors including financial services, automotive, high tech, consumer packaged goods and pharmaceutical. Carlson Marketing is truly global with a presence in North America, Europe, Asia Pacific and the Middle East, and over the last 18 months, has successfully positioned itself for growth.

"This acquisition is a logical extension for our company, as we diversify our business model to include a broader range of services within the loyalty management space in the US and internationally," said Rupert Duchesne, President and CEO of Groupe Aeroplan. "Acquiring a proven leader in the loyalty marketing space is the most cost effective and timeliest route to broadening our loyalty services offering. Carlson Marketing is widely recognized for their innovative thinking when it comes to understanding consumer behaviour, rewards and data analytics, areas that are pivotal to driving future growth in the global loyalty arena."

Groupe Aeroplan's businesses and Carlson Marketing will continue to operate separately and independently. Carlson Marketing's experienced and well-respected management team, led by President and CEO Jeff Balagna, will continue to run the operations. The two companies, with solid leadership and highly capable workforces, will benefit from leveraging intellectual capital across the entire corporation.

"This transaction is good news for the employees and customers of Carlson Marketing and a great opportunity for Groupe Aeroplan," declared Carlson President and CEO Hubert Joly. "It also frees up resources for Carlson that the company can deploy to accelerate the growth of its hotel, restaurant, and travel businesses at a time when significant opportunities exist in these markets."

"We look forward to joining forces with Groupe Aeroplan and significantly strengthening the scope of our loyalty marketing, program management, and engagement and event offering for customers, employees and distribution channels,” stated Jeff Balagna. "Together we become the world's leading loyalty management provider, able to offer a vastly-expanded network of loyalty marketing capabilities.”

"This acquisition makes good business sense," said Chief Financial Officer of Groupe Aeroplan, David Adams. "It will be immediately accretive to adjusted net earnings and free cash flow per share as Carlson Marketing is expected to generate positive free cash flow. In addition to substantially diversifying our revenue base, we will grow our consolidated top line by approximately 45% to over Cdn$2 billion. Through careful evaluation, we have concluded that this transaction truly represents a superior use of capital - even when excluding any potential synergies and including one-time transition costs related primarily to technology and infrastructure."

The Corporation will deploy a dedicated team, supported by external advisors, to pursue all forms of synergies and to identify potential collaborative initiatives to be rolled out over a period of 12 months.

About Groupe Aeroplan
Groupe Aeroplan Inc. is a leading international loyalty management corporation. Groupe Aeroplan owns Aeroplan, Canada's premier loyalty program and Nectar, the United Kingdom's leading coalition loyalty program. In the Gulf Region, Groupe Aeroplan owns 60 per cent of Rewards Management Middle East, the operator of Air Miles programs in the United Arab Emirates, Qatar and Bahrain. Groupe Aeroplan also operates LMG Insight & Communication, a customer-driven insight and data analytics business offering international services to retailers and their suppliers. For more information about Groupe Aeroplan, please visit www.groupeaeroplan.com.

About Carlson Companies, Inc.
Carlson is a global hotel, restaurant and travel company headquartered in Minneapolis, Minnesota. Carlson brands and services include: Regent Hotels & Resorts®, Radisson Hotels & Resorts®, Park Plaza Hotels & Resorts, Country Inns & Suites By Carlson, Park Inn® hotels, T.G.I. Friday’s® and Pick Up Stix® restaurants, and Carlson Wagonlit Travel®. Carlson brands and services employ more about 150,000 people in more than 150 countries. For more information about Carlson, please visit www.carlson.com.

About Carlson Marketing
Carlson Marketing is the world’s leading relationship building company. Carlson Marketing designs and delivers loyalty, engagement and event programs for some of the world’s best known brands. Carlson Marketing’s two global service offerings – Brand Loyalty and Engagement & Events– are supported by six core capabilities: Strategy & Brand Planning; Creative and Communications; Decision Sciences; Award Services; Technology Services and Customer Service. Headquartered in Minneapolis, MN, Carlson Marketing has large regional offices in Toronto, London and Sydney. For more information about Carlson Marketing, please visit www.carlsonmarketing.com

Caution Concerning Forward-Looking Statements
This news release contains forward-looking statements. Such statements may involve but are not limited to comments with respect to Groupe Aeroplan's and Carlson Marketing's strategies, expectations, planned operations, future actions, anticipated financial performance and business prospects. Forward-looking statements, by their nature, are based on assumptions and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business and its corporate structure. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, risks related to the business and the industry, Air Canada liquidity issues, dependency on top four commercial partners that purchase loyalty marketing services, including Aeroplan Miles, Air Canada or travel industry disruptions, airlines industry changes and increased airline costs, reduction in activity, usage and accumulation of Aeroplan Miles, retail market/economic downturn, greater than expected redemptions for rewards, industry competition, supply and capacity costs, unfunded future redemption costs, failure to safeguard databases and consumer privacy, consumer privacy legislation, changes to the Aeroplan and Nectar Programs, seasonal nature of the business, other factors and prior performance, regulatory matters, VAT appeal, reliance on key personnel, labour relations and pension liability, technological disruptions and inability to use third party software, failure to protect intellectual property rights, currency fluctuations, interest rate and currency fluctuations, leverage and restrictive covenants in current and future indebtedness, dilution of the Corporation's shareholders, uncertainty of dividend payments, level of indebtedness-refinancing risk, managing growth, as well as the other factors identified throughout the Management Discussion & Analysis on file with the Canadian Securities regulatory authorities. Material factors and assumptions that were applied in drawing a conclusion or making a projection or forecast are also set out throughout this document. We believe that the expectations represented by our forward-looking statements are reasonable, yet there can be no assurance that such expectations will prove to be correct. The purpose of the forward-looking statements is to provide the reader with a description of management’s expectations regarding the matters described in this news release and may not be appropriate for other purposes. The forward-looking statements contained in this discussion represent the Corporation’s expectations as of November 3, 2009, and are subject to change after such date. However, the Corporation disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

Media Contacts:
Groupe Aeroplan:	Michèle Meier	514-205-7028	michele.meier@aeroplan.com
	JoAnne Hayes	416-352-3706	joanne.hayes@aeroplan.com
Carlson Marketing:	Mike Kust	763-212-1797	mkust@carlson.com
Carlson Companies Inc.:	Sam Macalus	763-212-2477	smacalus@carlson.com

Investor Contact:
Groupe Aeroplan:	Trish Moran	416-352-3728	trish.moran@aeroplan.com

Don Peppers responds

2009-09-10T17:42:00.001+12:00

From Don Peppers: Just to clarify, what I said was that Coles (or any other retailer) should use a loyalty program primarily to bujild and maintain ongoing, one-to-one relationships with individual customers. Data is indispensable for this. Coles could continue with FlyBuys, but only IF the supplier were to make available to Coles all of the shopper data - and this is something I've been told either isn't possible or wouldn't be considered.

And yes, I was hired by Woolworths for a series of appearances this week and last. But I gave them the exact same advice more than two years ago. Whether my advice was influential or not, the fact is that they have now implemented a very good program. - @DonPeppers

"Coles Should Ditch FlyBuys" Loyalty marketing Guru Don Peppers

2009-09-10T09:24:00.004+12:00

Loyalty marketing and customer strategy guru Don Peppers of the Peppers & Rogers Group described FlyBuys as ''trinkets and trash'' program that offers little value to the merchants or the shoppers. Peppers recommend that Coles Supermarkets in Australia exit FlyBuys and "get their own program".

Peppers & Rogers Group, which used to be a Carlson Marketing group company, introduced the marketing strategy of 1to1 10 years ago with their book "The One to One Future".

The Sydney Morning Herald reports on "Supermarket Sleuth" Peppers, who helped Coles competitor Woolworths with their new Qantas loyalty program partnership in Australia. Peppers readily admits that he is biased.

As we've discussed before - Peppers likens the supermarket and loyalty program battle that FlyBuys finds itself in to the experience of the UK market. Sainsbury's, who use a scheme similar to FlyBuys called Nectar, was overtaken as the leading supermarket chain in Britain by Tesco less than three years after Tesco launched its Clubcard scheme in the mid '90s.

Peppers said Coles should ditch FlyBuys and find a program that gives it control over customer purchasing data, otherwise it risks losing more market share to Woolworths.

''FlyBuys isn't the right program as they [Coles and teh other partners in FlyBuys] don't own the data,'' said Mr Peppers. ''It's just a trinkets and trash program. We pay you for loyalty and you know what, we don't pay you too much.''

The Sydney Morning Herald also reports [which we've discussed here] that Coles dumped the frequent flyer mechanism of FlyBuys this year so shoppers could accrue points and get discounts on their shopping.

Points expiry - short, long or evergreen?

2009-07-07T15:39:00.003+12:00

One of the key questions we're asked when designing loyalty programs is - what should the life of the points be (or how quickly should they expire)? Our analysis frequently shows that performing programs with a three year points life generally perform as well as programs in which points are evergreen or never expire.

Research into a retail loyalty program by Yuping Liu, Ph.D presented at June's INFORMS Marketing Science Conference in Michigan USA ( http://www.yupingliu.com/wordpress/2009/06/15/loyalty-programs-and-crm-insights-from-marketing-science-2009-conference/) may have found a different trend. In a piece of research that looked at a single convenience store moving from no points expiry to monthly expiry and found that participation in the program as well as sales increased.

Consumers told - don't let your shopping rewards program change your behaviour

2009-07-06T17:32:00.003+12:00

A news item on Australia's 9 Network titled "Free Shopping Rewards Programs in Australia" (http://www.youtube.com/watch?v=bcXux06jNBQ) carried some comment from industry watcher Cannex.

The item reviewed Myer 1, Woolworths Everyday Rewards (and their Qantas partnership) and the Fly Buys programs. Cannex was interviewed and advised viewers not to let the various programs they participate in change their shopping habits. Specifically Cannex was talking about not shopping for more than you needed or paying more than you should. Sound advice.

But the fact that these programs do indeed change shopper's habits, albeit it in slightly subtler ways. Clearly none of these program providers would want their customers to buy more than they need or pay over the odds.

They do though want customers buy what they need from their own stores (rather than a competitor's) and also they'd appreciate customers paying full price on as many items in the basket as possible. The more successful the program - the more frequently these two things will be happening.

A new 800lb gorilla in Australian Loyalty gets into grocery

2009-06-29T11:00:00.005+12:00

For many years Fly Buys in Australia was held up as a shining example of a coalition loyalty program. Along with Aeroplan in Canada and Nectar in the UK, Fly Buys was the top of the coalition program foodchain in Australia.

Now it seems Qantas Frequent Flyer is challenging that position. This month Qantas has tied up a deal with Woolworths' Everyday Rewards Program. Customers who spend more than $30 can earn a Qantas point for every dollar they spend in store over the initial $30. Shoppers at Woolworths who are not Qantas members today can get membership free through Woolworths Everyday Rewards (an $80 saving). Going forward the Qantas points for spend offer will also be available at other Woolworths group stores.

Richard Umbers of Woolworths told The Australian Financial Review that 300,000 new customers had joined Woolworths Everday Rewards program in the first month - a 10% growth of their registered customer base.

Coles have run a gift card promotion recently which garnered them 78,000 new Fly Buys customers to their base of some 8 million - a 1% growth.

Interestingly - the May Coles gift card promotion cleverly delivered an "on us" shopping reward. Customers earned Coles gift cards whcih of course turn into more transactions in Coles rather than Fly Buys points which turn into rewards transactions across the network of Fly Buys participants.

Australian Food News observed "the Woolworths-Qantas announcement does raise the interesting prospect of a winged EveryDay Rewards offer versus a flightless FlyBuys".

What's the future for coalition programs?

2009-05-15T15:03:00.005+12:00

Fly Buys in Australia is going through some changes as leading tenant Coles looks to take on its competitor's Woolworths tie up with Qantas Frequent Flyer. Woolworths now has 2.7 million customers in its Everyday Rewards program while Qantas Frequent Flyer has 5.4 million members. Their tie up is expected to come to market in the middle of 2009.

Woolworths customers will be able to earn points in the Qantas Frequent Flyer program. The revamped Qantas Frequent Flyer program now offers more than just flights. Since the middle of 2008, it has become a one stop shop offering merchandise, gift cards and experiences.for redemption.

In New Zealand, long time tenants of the Fly Buys coalition program Telecom and Ezibuy (who were part of the program when it launched in 1996) left the program in 2008. Now Shell, which owns 25% of the Fly Buys company, is looking to sell it's stake along with 230 petrol stations and it's investment in the New Zealand refining Company at Marsden Point. There are 4 shareholders of Fly Buys New Zealand; Shell, Foodstuffs (operator of New World), IAG (State Insurance and others) and BNZ.

Arguably, Fly Buys customers spend more on food (Foodstuffs - New World) and more often than they spend on credit cards (BNZ) and insurance (IAG). Even allowing for the host of other places customers might earn Fly Buys points, food purchases at New World must be a significant source of most customer's accrued points balances.

New Zealand's other major supermarket group (about 50% market share) Progressive Enterprises has grown the chains at which it's competing OneCard earns discounts and points from Foodtown in the early days to incorporate Woolworths and now Countdown. One of the potential buyers of Shell's quarter share in Fly Buys is none other than the owner of Progressive Enterprises - Woolworths Australia (according to ABN Amro Craigs broker Peter McIntyre on 14th May).

To keep this interesting, Shell New Zealand has the fuel discount offer (earn cents off per litre) with the Progressive Group.

With such a lot happening to Fly Buys on both sides of the ditch, it's difficult to find any precedent globally that might be instructive for us. The best I've been able to find is the long running battle between Tesco in the UK and it's rival Sainsburys.

The Tesco Clubcard (the Grand Daddy of all grocery loyalty programs) might be likened to Progressive's Onecard program. Points and discounts are earned by shopping in the store and convert to vouchers and coupons which the customer spends in the store. New World's use of Fly Buys might be likened to Sainsbury's use of the Nectar loyalty program - a coalition program like Fly Buys. Points earned by shopping at any Nectar outlet convert to benefits like those in Fly Buys - gift vouchers, goods and other rewards.

Verdict Research in the UK believes that the Sainsbury's Nectar card has not worked well. However their senior analyst Malcolm Pinkerton reckons with Tesco upping the stakes "That should change now"

Loyalty programs an imperative at the centre of Retailer's marketing

2009-05-13T17:34:00.011+12:00

Retail loyalty programs have been around for a long time and to be quite honest - haven't advanced or developed much. That's changing with players like Myer in Australia treating theirs as an asset that needs to be (a) sweated and (b) produce a return.

Its always been true that retail loyalty programs are the price you pay to get the customer data - it's what you do with the data that makes you money. Unfortunately - too many retailers do very little with the data. For some of them in New Zealand this may be because the competitive bar has been set relatively low. For others - the strictures of belonging to one of the two major coalition programs in New Zealand (Fly Buys, AA Rewards) means they can't do as they wish with the data.

The bar has been raised in our region by Myer's relaunch of their Myer One card (and their much discussed move into financial services) and Woolworths Australia's Everyday Rewards and Qantas tie up. Myer's scheme is more sophisticated than your average retail loyalty program and the results are impressive. The Age reported that the 2.6 million members of the Myer One program account for 60% of Myer's sales. In 2006 it was only 43%. These are people it can promote offers to knowing with a high degree of confidence that they are (a) relevant and (b) going to be taken up at good margin. Remember "Death before discounting". For example - one retail loyalty program we operate in is 76% accurate in predicting when a shopper will return and spend again. Priceline in Australia is following Myer's lead and relaunched its program in November last year lifting members (now at 2.7 million). It's still not at Myer's level with only 40% of sales through the program customers and program members having a basket size 30% above ordinary customers.

Are they an imperative? According to Steve Ogden-Barnes of Monash University in Australia, retail loyalty programs are not only an imperative but "the bar's been raised in terms of expectations and industry practice".

But there's also casualties. With the bar having been raised and the retailers of Australia moving to catch up, the reasons for not using the data (the program's the price you pay to get it) need to be addressed. A new battle has begun with Coles looking to exit the FlyBuys program in Australia and replace the program with its own offering in-store discounts and benefits. This is a classic closed loop program as pioneered and perfected by Tesco (Tesco set the bar for retailers globally many years ago and is about to lift it again).

Coles is in a loyalty program race against Woowlorths who have tied up with the leader in the Australian market - Qantas Frequent Flyer points. Qantas have effectively trumped Fly Buys in Australia and even shareholder Coles will stop using Fly Buys. (In New Zealand terms - Coles might be likened to New Zealand's New World currently offering Fly Buys who compete with Progressive Enterprise's supermarkets in Woolworths and Foodtown offering OneCard.).

The race is on for customer data.

Retailers - the difference between good and bad programs

2009-05-08T14:12:00.007+12:00

Aberdeen Group has just published (with support from Carlson Marketing) a report that discusses the differentiation between a good retail loyalty program and a bad one (called Laggards in the report).

This is a great yardstick to understand whether your program is doing all it should or whether your investment is being squandered.

The headlines: if you have a retail loyalty program and you're not achieving, year on year increases of:

19% - average basket value increase (the dollars spent by each customer on each shopping trip)
16% - YOY lift in customer retention rate
5% - YOY decrease in customer attrition rate

...then you're not getting value for your investment (or more bluntly - you have a cost centre, not an investment). Many of the retailer programs we analyse in New Zealand fall below these metrics and seem to have operated at this level for some time.

However - there's a number of simple steps to radically improving performance. All of them flow from better using the data that already exists. Start with financial requirements and make these aggressive. How much do you want to grow sales by and how much do you want to improve your revenues over your costs? Loyalty programs are there to grow profits; they're measurable investments that can compete on the P&L with any other investment. They don't belong to the same family of marketing as brand building or advertising which have returns but not ones you can see in the financial statements.

Once you know your financial targets - roll down to the customer value proposition - what do you have to give customers to achieve the financial goals. Be relentlessly mercenary - incentivise ONLY profitable behaviour.

If a customer is already giving your business - don't incentivise them for that business. Incentivise them to bring the next shopping trip to you - the one that they would normally have given to your competitor. Offer points for uplift and points for growth. And offer points only for these if you're able to. This also suits a good financial model as the cost of the incentive comes out of the new margin earned and isn't a flat cost on the sales you already have.

Once you have these two factors nailed - its a simple matter to design the required business processes that will deliver the customer value proposition. And once you know those - you know whether you have the assets internally to achieve your goals or whether you need an outsource partner to deliver.

Australia Round 3 - Direct Earn Credit Cards On Steroids - Singapore Airlines

2009-05-08T10:27:00.003+12:00

Qantas's recently required that all the bank credit card loyalty program in Australia remove redemption to Qantas Frequent Flyer points as one of the redemption options in those programs. Now - customers at Aussie banks can either redeem all of their credit card loyalty points into Qantas's Frequent Flyer program - or none. Now - if Aussies want to earn Qantas Frequent Flyer points on their credit cards - they have to sign up to do so exclusively and can't have any of the other rewards that the bank might offer.

NAB for instance no offers only airline co-brand cards (Direct Earn) with Virgin and Qantas. Singapore Airlines and Westpac Australia though have raised the stakes (and surely the costs) with the new Platinum Westpac Singapore Airlines card.

This has some seriously strong offers including including 10,000 points for the first transaction. It has an Amex companion card (the de rigeur interchange defence strategy) that offers 3 points per dollar. According to a posting on FrequentFlyer.com.au - "Certainly a decent card to get if you're a Singapore Airlines flyer anyway!"

Round 2 Australia - Credit Card vs Airline Loyalty Programs

2009-05-05T15:14:00.005+12:00

In Australia - Qantas is the victor. Qantas has seen a lot of press in the last 2 years with much of it focused on its Qantas Frequent Flyer program and the possibility of that being spun off.

Qantas has embraced a whole host of competitively priced non-air rewards options for its customers. Most importantly though - it's engineered a showdown with the Aussie banks who were previously transferring points out of their credit cards programs into it's Frequent Flyer program. Qantas no longer permit the transfer.

Customers in these banks had to make an all or nothing choice which each of the banks had to enable. For both choices customers are able to carry on earning points on their credit cards. The difference is in the rewards -

Choice 1 - lose the option to convert credit card loyalty program points to Qantas's Frequent Flyer Program
Choice 2 - retain the option to convert credit card loyalty points to Qantas's Frequent Flyer Program - but this is your only reward choice (a so called Direct Earn option) - so no more gift cards, merchandise and the like from the bank (you can now get them from the airline)

The difference in approach to this challenge from the Aussie banks has been interesting. None have gone the Capital One route and completely eschewed an airline co-brand card (or Direct earn card). Most now have portfolios that offer Qantas Direct Earn (co-brand) cards and other cards on which they offer their own loyalty program. Some also offer Virgin Blue co-brands as well. National Australia Bank (the owners of Bank of New Zealand) seems to have invented a new strategy that we didn't see played out in the American market. Their's might be characteristed as teh opposite of Capital One - they're closing their own credit card loyalty program and going forward will only issue co-brand airline cards.

Only time will tell how well they fare.

Credit card programs take on Frequent Flyer programs

2009-05-05T14:23:00.006+12:00

Its been some time coming but we seem to have a winner. In the USA it's the credit cards companies, in Australia it's Qantas and in New Zealand the jury's still out.

The USA - credit card companies beat the airlines to have the best rewards offerings

In the USA, credit card providers have slowly but surely trumped the Frequent Flyer programs offered by the airlines. The holy grail of rewards is the concurrent offering of travel (always a winner), merchandise, experiences, cash-back and gift cards.

Airlines started owning the travel category and credit card programs transferred points into the Frequent Flyer programs. But the airlines got lazy. Customer's couldn't use the points when they wanted to and the points (over 7 years and according to Bain) halved in value. Only recently have airlines been forced to offer a valve to vent this accumulated Frequent Flyer points pressure (note the national carrier in New Zealand innovatively and transparently solved this problem a few years ago with Airpoints Dollars - a world first). Many airlines now offer gift cards and merchandise along with enhanced "any seat" redemptions but only on their airline.

But in the background, credit card companies have grown their offerings to include all the usual rewards suspects AND the capacity to redeem for Any Seat, on Any Airline at Any Time. AND they still issue airline co-branded cards. The figure below from Scott Hornick at last year's Frequent Flyer Conference tells the global credit card airline co-brand story.

Capital One doesn't do airlines co-brands and the value proposition comes out very clearly in it's excellent advertising campaign of 4 years ago.

More points being issued, each worth less

2009-05-05T14:09:00.006+12:00

Analysis by consulting company Bain shows that average airline or airpoint has devalued significantly in the last few years.

The availability of seats on the airline for redemption, the increasing points required for each of these seats and then the reverse good news of reduced prices for each ticket means that thepoints accrued in 2000 and worth less than half their value today.

And airfares are still coming down. We have a host of airlines now crossing the Tasman to choose from (7 at last count including Aerolineas Argentinas, LAN, Jetstar, Pacific Blue, Qantas, Air New Zealand and Emirates) and trips to Aus account for 45%- 50% of our international travel. And, according to the Dominion Post – today’s international airfares are 65% of what they were last year (now $1,599 to London compared to $2,300 last year). And that’s 45% of what the same fare was in 1989 (20 years ago).

More and more – it makes better sense to buy your travel with cash rather than redeeming your points.

Frequent Flyers accumulate points for travel - but have to settle for merchandise and gift cards

2009-05-05T13:59:00.004+12:00

Unhappy Frequent Flyers

Frequent Flyers are unhappy. With the notable exception of the New Zealand carrier, they can't use the points for flights - the reason they were accumulating them in the first place. Many airlines have addressed the problem by offering a release value for the pressue of points buildup - online shopping malls where points can be used to buy merchandise and vouchers. Qantas is the biggest in our region doing this.

Forget flights - give us something we can get

So customers are telling us that they want to use these Frequent Flyer points on something else as the Freddie Award analysis below shows. 51% of Frequent Flyers in this survey said that non-air (so, merchandise, gift cards etc) were very important or important as rewards in theprogram.

With this as the industry backdrop - Air New Zealand have become the global innovator. They've opened up the whole of the plane on every flight to their Frequent Flyers in the Airpoints Dollars program. That hasn't protected them from the global downturn though and their profit dropped 80% in the first half of 2009.

Frequent flyer points are now being issued 10 times faster than the capacity to service them.

2009-05-05T13:01:00.011+12:00

Too many points - the redemption dilema.

Airline's Frequent Flyer programs have run up against a wall. For the last few years, they have been issuing more miles or Frequent Flyer points than they have the capacity to service. Craig Landry of Canada's Aeroplan (the Canadian equivalent of Fly Buys) called it the Redemption Dillema at last year's Frequent Flyer Program in Istanbul (at which Carlson were presenting as well). The figure below shows airlines points sitting in the accounts of travellers around the world (grey line) against the current numbers of seats and flights globally (orange line). And airlines purposefully resrtict the number of seats on each flight that their Frequent Flyer customers can use their points on.With this as the industry backdrop - Air New Zealand have become the global innovator. They've opened up the whole of the plane on every flight to their Frequent Flyers in theAirpoints Dollars program. That hasn't protected them from the global downturn though and their profit dropped 80% in the first half of 2009.

That can't be a recipe for success.

The new interactive marketing technologies – sustaining a frictionless dialogue with customers.

2009-04-22T18:23:00.007+12:00

First published in the New Zealand Marketing Association's DLB magazine in 2007

People can fall asleep watching television. They can fall asleep reading a newspaper or magazine. Ditto radio. By contrast though, people generally don’t fall asleep in mid-conversation or when they’re surfing the internet. The difference? Dialogue – two way communication.

Advertising still works.

Brand advertising is still important to make your products known. It moves prospects from awareness through to trial of your product.

That’s when the real work begins.

Advertising in all its forms though is very different to dialogue. Creative for the two way dialog on the web needs to be done differently to that produced for the one way media of television or print. The adverts you put online are a substitute salesperson. The acid test of whether your online ads are on target is to ask – “how does my ad sound as part of a sales presentation delivered by a salesman on the shop floor?” A good example of the genre done well is the banner advert pictured here for Saturn – a Carlson client in the USA. The banner’s language is the same a salesman in a Saturn showroom might use.

The sale is only the start

According to Tom Peters “All business success rests on something labelled a sale, which at least temporarily weds company and customer”. What happens after that wedding; whether it be customers repeating that initial purchase or upgrading the first purchase to a premium product purchase over time is up to us as marketers.

Theodore Levitt’s view is that “The sale merely consummates the courtship".

Then the marriage begins. How good the marriage is depends on how well the relationship is managed by the seller”.

Their schedule – not yours.

Whatever technologies you choose, expect to work at higher speeds than ever before. Many next-generation techniques reward immediacy—but that can be difficult to achieve in large companies with regulatory and organizational hurdles to clear.Companies that plan to use RSS, blogs, and podcasts as a more real-time way to reach customers, whether in the aggregate or in tightly focused messages, will need to redefine nimbleness on a corporate wide

level if they want to move beyond traditional legal department and marketing communications department approval and turnaround times.

Listen as much as you communicate

The internet allows dialogue. Data capture and analytics, though critical, need to be augmented with what is

learned in dialogue for a softer more qualitative take on latent needs. Lester Wunderman promotes going back to the “Listening Departments” of the 1950s. These days the technologies supplant this function and blogs, communities and wikis allow unstructured communication and dialogue

augmentation of the data and analytics.

Globally there are some great successes. On MySpace, the recent movie “X-Men: The Last Stand” has over 2.6 million “friends”. It may seem rather unusual to invite customers to become “friends” of your brand through the likes of MySpace or FaceBook but the rate at which customers are signing up for this friendship shows they’re after the dialogue that comes with these communities. Victoria’s Secret recently launched pages on both FaceBook and MySpace focused on its PINK range of underwear. These sites already have 320,000 and 215,000 friends respectively who, on their own personal pages, (now some 535,000 pages in total) carry the Victoria’s Secret PINK collateral.

We also know that 55% of the target market for this range of underwear visits MySpace daily.

These cases also illustrate another important distinction between advertising and dialogue: marketers have to cede some control of their products and brands to their customers when in dialogue. Whilst this may seem counter-intuitive, there are some clear benefits. Our research shows that customers most trust email that they have opted into receive over any other form of media including TV and print. For them it’s a dialogue that they’ve initiated (Interestingly - they least trust celebrity endorsements).

At the same time, some 90% of customers regard word-of-mouth as the best source of ideas and information. The interactive technologies now available to us as marketers are only making those in-built and existing social mechanisms more frictionless for us.

Realistically in New Zealand today – no marketer can really claim to have these technologies at the centre of their marketing strategies (though many of our clients are starting to install first generation versions of these solutions into their customer dialogue).

Without exception though, every marketer in New Zealand has a steadily maturing, website based, online strategy in place. There are good, demonstrated precedents of web-done-well globally. In 2005 Kia Motors was spending 85% of its advertising budget on television. Analysis of customer data and research led to a change of strategy

pushing the bulk of their USA marketing online. Traffic to Kia.com is up 27% year on year and it’s producing 15% more leads for dealers. In fact some dealers claim that 75% of their business comes through this channel. Recently Kia bought space on Yahoo’s home page to launch a new car model. According to Kia’s CMO “it blew the back off the servers and the model had instant name recognition”.

Maybe a simple first step for all of us comes from the CMO of Wells Fargo in the USA that marketing’s first task “is to see itself as an integrating force for the customer”.

Employees are the brand

"I am convinced that companies should put staff first, customers second and shareholders third - ultimately that's in the best interest of customers and shareholders”. So said Richard Branson and he’s not alone in this sentiment. In fact there’s a significant body of research supporting this strategy and demonstrating the resulting customer advocacy it generates and the attendant financial benefits of this advocacy.

Despite decades of streamlining and adding

predictive processes to the operations of a company, employees still bring their emotions, dreams, hopes, and fears to work. Smart companies will capitalize on, n

ot quash, those emotions through employee engagement programs that can drive the equation that happy staff = happy customers = happy shareholders.

It’s no great stretch to understand that customers interact with your front line staff more frequently and more meaningfully than with any of your advertising or marketing. Employees and staff are the secret weapon – where the long term battle is won or lost. Employee engagement is the foundation on which all customer dialogue success is based.

HP, a Carlson client internationally, has gone from poor profits in it’s PC Division 3 years ago to the leading market share in its category today. Back then HP discovered through research and analysis that, whilst they were getting through initial sale without much difficulty, it was the relationship with HP customers after the sale that was important to their business. The majority of this customer initiated contact was to staff at HP’s support call centres.

HP trained its staff to understand the emotional connection between HP products and HP customers. It has also created the “Voice of the Customer”, an interactive tool much like MySpace for all staff to share customer feedback and insights. In effect, this is a company-internal deployment of the same tools companies are using to conduct dialogues with customers.

Sears Department stores, also a Carlson client, runs an employee recognition and rewards scheme that it can tie back to customer loyalty and financial goals. A 5 point increase in staff engagement delivers a 1% increase in customer loyalty which results in a 3.4% increase in earnings before interest and tax (EBIT).

JetBlue Airways in the USA entered the market in 2000 with a similar philosophy to Branson’s “employees first” thinking. In a market where many airlines have gone bankrupt and most are delivering middling returns, JetBlue’s financial metrics (ROA, ROE, operating margin and gross margin) have all been well above industry averages. Why? Engaged and motivated employees deliver the experience and service the JetBlue brand has promised.

Finally – a word of caution. Be authentic and be honest in using the new technologies because all these dialogues, like those in the real world, are only sustained by trust. Be transparent about your motives with both customers and employees. A 2002 campaign by Sony Ericsson Mobile for its T68i mobile phone and digital camera called "Fake Tourist" involved placing 60 actors posing as tourists at attractions in New York and Seattle to demonstrate the camera phone. The actors asked passers-by to take their photo, which demonstrated the camera phone's capabilities, but the actors did not identify themselves as representatives for Sony Ericsson.

That engulfed Sony Ericsson in a media furore including a roasting from television’s 60 Minutes and write ups in the likes of the Wall Street Journal. Maybe they got lucky and people fell asleep watching and reading about it.

They’re not like us.

2009-04-21T19:58:00.007+12:00

Originally published in the March 2008 edition of teh New Zealand Marketing Association's DLB magazine - authored by Carlson Marketing

Salvador Dali said that “The problem with the youth of today is that one is no longer part of it.”

We all know that to reach the youth in the youth market we have to live with the fact that they are creating content faster than we are. The real competition for youth attention is youth generated content. 100 million blogs, social networking sites,

wikis, forums; there are plenty of online places for any of us to connect with like-minded people. The youth just do more of it.

And unless we are really funny or outrageous with our creative efforts, (not always appropriate) they prefer their own content to ours!

There are ways to harness this desire for connectedness. Two current community-based projects are teaching us that the rules are different, but youth are willing to engage with you if you learn the rules and follow them.

Here we profile two client programs which are both works in progress but are mature enough that some consistent themes are being repeated. We share these nascent learnings for us all to benefit from.

Stop smoking by widget

The issue : Scary images or tar filled veins and cancerous lungs are questionably effective in the adult population. They’re less than effective at preventing youth from trialling tobacco if smoking is seen as cool and will likely annoy authority.

Our client : an Australasian government’s national health department looking to reduce the health impact and future economic cost of smoking.

The challenge : To make smoking uncool; to de-normalise it among the youth.

The solution : Facebook is the channel. Humour is the value proposition.

Market tests have shown that non-smoking youths are willing to message their smoking friends on Facebook but only if the message is funny. It mustn’t be confrontational as they don’t want to risk losing the friend.

A widget will allow Facebook users to place humorous images on friends’ walls, with escalating status for users who use them repeatedly. To date this has proved a successful social intervention; youth channel, youth rules for content and youth as the channel.

The referee may not listen but the management do

Moving from the disease of smoking to the other end of the continuum, we’re also working with a sporting body to grow their profits.

The issue : Aging and declining membership of a football franchise together with reducing attendance at games and all the financial difficulties that produces.

Our client : An Australasian sporting body with a large base a members

The challenge : To lift membership levels (especially with youth – the future of the game), lift game attendance and hence lift revenues

The solution : A “focus group on steroids”.

Working with the membership-based sporting organisation, we established a ‘by invitation’ online advisory panel of several thousand passionate members. These members came to games regularly and had been paying their subscription fees for a number of years.

The incentive offered; the club will listen to your advice, implement your suggestions if they can but in all events they will talk to you and let you know that they heard you.

Watching these online members ‘talk’ to each other, and the club, about a subject of common interest is a visceral experience for marketers more familiar with response models. Questions are asked and answered directly and quickly.

The panel has given advice on which players to feature in promotions, and how to talk effectively to the membership. More importantly, thanks to the Hawthorne Effect these ambassadors have personally increased membership significantly above last year’s levels through word of mouth recruiting.

The panel is not a research vehicle and is not intended to be. Understanding the opinions and attitudes of your most engaged customers is more important than understanding the average if you are trying to generate positive word of mouth for your brand or product. They are simply more likely to bother than the average customer.

Research we’re finding true

Its Gen Y and Gen Me and Gen C

Forrester found that “Gen Yers are more apt to like style, fun, and technology; seek out what’s hot; make purchases based on image; consume all types of digital media; and use every wireless service on their mobile phones”.

In consuming all types of digital media they’re also creating it and doing so far faster than any marketer. The rate of consumption also has them tagged as Generation C for content and also Generation Me. This latter description was developed by Jean Twenge who believes “Gen Yers were raised and schooled in an educational system focused on promoting self-esteem and a “you can be anything” mentality. As a result, they’re more narcissistic than other generations. Students scored significantly higher in the Narcissistic Personality Inventory (NPI) test in 2006 than they did in 1987”.

Within these broad descriptions there’s also a level of granularity of subcultures they identify with including niches such as “goth,” “emo,” or “prep” according to Forrester. Each of these is differentiated by clothes they wear, the music they listen to, and the media they consume and share.

Kagoy - Kids are Getting Older Younger.

Best described late last year in The Times of London, “KAGOY has also affected the dolls that little girls covet. As well as Barbie with her accessories, there are now the streetwise, precocious Bratz dolls. The Bratz Secret Date Collection, marketed to six-year-olds, pairs each Bratz girl with a Bratz boy, and includes two champagne glasses and “tons of date-night accessories”.

Kids are learning about adult life much earlier than ever before. And in many instances they want to emulate it and are influenced by the style of older teens.

Listen

Make it a conversation. They are used to conversations, not just telling, also listen. Listening means confirming you heard in some way. Implementing their suggestions is one way, replying to them is another way. Close the loop.

Authenticity

Genuinely invite discussion, do not presume and praise your product on their behalf. This means being brave, they may say negative things. They will do this with or without you by the way, so it is best to be involved so you can ask them how to improve

Volume matters

As you really want to address a market, not a handful of customers, volume matters. Use existing communities which already have large numbers of participants or use traditional marketing to seed your own.

Data – always data

Data should still drive marketing decisions, not anecdotes. Marketing to youth through conversations does not mean you should abandon rigour. Find a way to link ideas expressed in the conversation with actual behaviour. Registration, coupons, referrals; there are ways to do this. Go to the trouble.

Legal and necessary insider trading for marketing professional

2009-04-21T19:28:00.010+12:00

Originally published in the June 2008 edition of teh New Zealand Marketing Association's DLB magazine - authored by Carlson Marketing

If your marketing budget was equivalent to an investment budget, trigger marketing is an investment strategy that seeks out high yield returns and invests only in those stocks (customers) rather than in every stock in the market. By contrast, standard marketing invests only in the stock index (all

potential customers in the market ) and hence each stock (customer) gets a piece of the investment budget. Over time the index (all customers) does deliver returns which are both humble and directly proportional to the sum invested. The only way to make more money investing in the index is to increase your investment (more share of voice at the customer).

There is one critical distinction between stock investment strategy and marketing investment strategy – marketing professionals are legally permitted to be insider traders. In fact – if they’re not insider trading then they’re not performing their fiduciary duty. Insider trading delivers the holy grail of the investment professional – high return with low risk. Trigger marketing delivers the same for marketing professionals.

Profile your customers.

Trigger marketing, when used properly, is highly discriminating and mercenary. We generally find four major customer tiers. Tier 1 are our outstanding customers who are clearly giving us all their business in our category. These will be less than 10% of your base and in general the goal with them is retention.

Tier 2 probably comprises another 20% of the base and they’re giving us considerable business but are clearly shopping around. We want to

reduce their promiscuity. These two tiers together are giving us close to 80% of our revenue. The last two tiers have some value but the returns they generate aren’t as good as we can get out of the first two.

Each customer has a profile and a specific ‘shopping basket’ or purchase history. This history builds a picture of who they are, and what people just like them (their peers) buy. By comparing them to their peers we can identify

what they’re not buying from us and by default must likely be buying from somewhere else. We use this data to promote the products purchased by their like minded peers that they’re currently not purchasing from us.

The net effect? You know who is likely to respond to what kind of offers, and more importantly, what discounts you need NOT apply; reducing mass markdowns and allocating your marketing dollars to those who will respond best and deliver the most in return.

The key areas

There’s generally five areas for data gathering:

1 - Profitability

Look at the profitability of both customers and products and the intersection of the most profitable of each with the other. You’ll also need to know individual product margins both list and realised after all discounts and incentives.

2 - Basket typology

Identify the popular categories and their profitability. Also understand what products are mixed in which baskets.

3 – Promotional promiscuity

This is more difficult to assess as we find most organisations don’t retain data on customer responses to offers they’ve made to them. However it’s one of the more important measures as it’s the measure of the impact of your past marketing efforts. Most importantly you want to know who’s a discount only shopper.

4 – Life stage

Age and gender feature prominently here as expected. Also useful is self reported information such as hobbies and interests but these are less valuable than actual behaviour as measured through facts.

5 - Shopping habits

Key here are the recency and frequency features most marketers will be familiar with. However insights behind the data are also useful as tested through various hypotheses.

Once the data is assembled the real work of developing a predictive model begins. The five core data areas defined above are assembled into working ecosystem with each area feeding the others. Done successfully a good predictive model will tell you with a high degree of accuracy (greater than 75%) who will visit which of your stores or branches next, when they’ll do this and what they will buy when they get there. Much of our work in this space is now based on medical and actuarial survival models and the results for sections of the customer base are excitingly accurate.

For example, for one of the tiers in a retail client’s customer base we’re able to predict with an 80% level of accuracy when a customer is due back in their store.

One of the benefits of trigger marketing is how well it fits with the other data driven areas of the business such as:

> Finance - you can predict the revenue lift for a given campaign and demonstrate how much better than the next best option it might be

> IT - you can predict how many hits the website will take and hence the bandwidth required

> Inventory management – you can link customer demand by category to your supply chain

The results speak for themselves. The following are examples of successes we’ve had using this approach:

Client	Communication	Result
Credit card issuer	70,000 customers	Spend lift 43%, transactions lifted 67%
Upscale Department Store	497,000 customers	88% lift in volume
Home Retailer	105,000 customers	48% lift in volume
Office Supply Retailer	185,000 customers	108% lift in volume
Hotelier	594,000 customer	$1Million incremental volume
Grocer	40,000 customers	132% lift in volume
Office Supply Retailer	185,000 customers	98% lift in volume

The principles of trigger based marketing are relevant to any business and the biggest returns come from the first rough and ready steps in treating different customers differently.

Growing Green Profits

2009-04-21T18:13:00.003+12:00

Originally published in the December 2008 edition of the New Zealand Marketing Association's DLB magazine - authored by Carlson Marketing

An inconvenient company.

One of our clients, a senior manager in a big Australian finance company, went to see Al Gore’s Inconvenient Truth. The next day he demanded from us a totally Green customer strategy for his entire division’s customer base and what’s more – he had the CEO sign off the investment before the week was out.

Global Green

This wasn’t an isolated incident for us. Our colleagues in other countries reported either a strong demand for Green solutions or the launch of Green solutions in banks in their markets. To understand why, we launched a study into the reasons for and responses to Green as bank strategy.

What is Green

Yes – it did start with tree huggers. No – it’s no longer possible for an astute businessperson to openly claim that climate change is not real. Your last chance for doing that died when the Global Climate Coalition (GCC) died in 2002. Composed of companies such as Exxon, Shell, BP and GM, the GCC invested heavily to cast doubt on global warming. Visit the websites of any of those past champions of the falseness of global warming today and their new environmental credentials are headlines.

The science says; global warming is driven by the emission of Greenhouse gases into the atmosphere, chief of which is the Greenhouse gas carbon dioxide. These gases trap heat in the atmosphere, forming a blanket around the earth which retains heat and generates global warming. Almost every activity that a company or an individual engages in releases carbon dioxide. The sum of these emissions comprises the individual’s or organisation’s “carbon footprint”.

Why is it important

The science no longer matters. What matters now is what customers believe that global warming is real. More important though is who they believe should be responsible for addressing it – every company on the planet. More and more over the last decade, curing social ills has become the responsibility of the companies that customers deem to have contributed to the problem. Supposed polluters and those who fund supposed polluters are all responsible, in the eyes of certain customers, for addressing global warming.

Why banks and what are they doing

Banks are certainly not significant contributors to Greenhouse gas emissions. Yet major players including HSBC Bank, GE Money, Citibank, Bank of America and Westpac have implemented Green strategies. These range from offering environmentally conscious credit cards to linking their brand identity to Green principles.

Bank first, customer second

Our Australian customer’s new Green strategy never got to market. A lucky coincidence for him perhaps. Had he got to market, his proposition would likely have failed because it would have been what is know as Greenwashing – pretending to offer Green products before putting in the investment to become a Green enterprise yourself.

Citigroup started its Greening process in 2002 with significant energy consumed to light and heat its more than 9 million square meters of office and branch space around the world. 80% of their energy consumption came from just 10% of buildings which included skyscrapers and data centres. New offices and branches now maximise the use of natural sunlight and minimise the use of electrical lighting. As an added benefit – staff morale and engagement rose. As one Citigroup manager noted “People are much more like cats and plants than we like to admit”.

Two ways to play

Our research found two distinct customer propositions on offer from banks around the world. Their order is important. First - work to reduce your customer’s carbon footprint. We found innovative and practical financial instruments ranging from car finance for fuel efficient vehicles (generally hybrids) through to mortgages that funded solar water heaters and building insulation improvements to reduce the power bill. These products save money for the customer.

Second – help your customers offset their remaining impact through carbon credits and the like. These all come at a cost to the bank or the customer and included a UK bank’s offer to plant 40 trees on your behalf through to funding wind and solar power projects.

That bank’s not red - it’s Green

Westpac’s a great example of a bank doing it well and is recognized for its success by topping the Dow Jones Sustainability Index - a global rating for Green firms - for five of the last seven years.

Westpac in Australia was a corporate trailblazer linking its Green and sustainable initiatives to its corporate identity through its adverts. Our client Westpac New Zealand is up there too and in late November launched a customer innovation. Back to its Green trailblazing roots, Westpac has developed and launched an online ecoshop subsidising a raft of Green, money and planet saving goods for all Westpac Online Banking customers. The first bank in the world to offer such a service; it includes Green goods from energy efficient appliances to worm farms.

A similar catalogue of goods is now also available for redemption in the Westpac hotpoints credit card rewards program.

The results of our research

A Green strategy benefits four groups:

1. Customers – Green Products. Aligned with specific values of certain customer segments, Green products offer a good solution for banks to differentiate themselves in a new way.

2. Operations – Cutting Costs with Green. Reducing electricity consumption also reduces Greenhouse gas emissions. Saving money and saving the planet are tightly aligned.

3. Shareholders – A Sustainable Investment. Many investors seek out businesses which effectively create long-term value by implementing strategies that will grow the business today without compromising future growth.

4. Green organisations benefit from enhanced employee engagement. Talented staff and graduates are being attracted to organisations based on their Green credentials.

Get the report. For a copy of Carlson Marketing’s report “Banks – Growing Green profits. Winning with customers, shareholders, employees and operating costs while saving the planet” email simon.rowles@carlson.co.nz

China's not always first for your globalisation strategy

2009-04-21T18:02:00.005+12:00

First published in the New Zealand Marketing Association's DLB Magazine in September 2008

China’s not always first

Les Mills International should be our poster child for Kiwi marketers going global. They have 5.5 million people working out every week to likes of their revolutionary BODYPUMP program. Their distribution network to achieve this is 60,000 instructors leading classes in 12,100 fitness clubs in 70 countries around the globe. They’re also quintessentially Kiwi having been founded 11 years ago by our very own icon of fitness; Phillip Mills. The original weights-to-music group fitness program has grown to eight different programs today.

China’s not always first

Global for Les Mills International was not China first. Their network was solid and established in the mature economies of the USA and Europe before they attacked the BRIC (Brazil, Russia, India and China) markets. They’ve recently launched in India, are now in China and Russia and have massive growth in Brazil which is already up to 1,200 clubs. Good thing too. BRIC markets will account for 50% of the global economy by 2050.

Going global for most marketers is frequently a rose tinted vision of China’s 1.3 billion people and their rapidly growing consumption of any and all products. Not so fast. The China market is more like a mere 130 million middle class Chinese today. That will rise to 650 million in 2010.

Exporting your Kiwi business to China means you need to deal with the basics of language and dialects in China and you’ll need to transact in their currency.

Localise me (carefully)

You’ll also need to amend or even compromise your proposition to meet local requirements. Was Google’s decision to exclude the Human Rights Watch website at China’s request an amendment or has this compromised their “do no evil” policy? It’s in dealing with local requirements in China that money is made or lost.

Disney’s Euro Disney stumbled when it first opened in Paris because it was too American for their target French employees. Recruitment initially proved slow as the standard US dress code banned facial hair and dictated “appropriate” underwear – not something the French appreciated.

We’ve also stumbled. Carlson Marketing is one of the four pillars of Carlson Companies (the other three are Carlson Wagonlit Travel – now the biggest travel company on the planet, Carlson Hotels and Carlson Restaurants). Last year Carlson had global revenues of NZ$50 billion. When our restaurants division first opened the TGI Friday’s chain in Korea they weren’t American enough for customers. TGI Friday’s in Korea didn’t follow the American menu and instead included traditional local dishes like kimchi. Customers weren’t impressed – they expected the same global menu consistency of a Starbucks or a McDonalds.

In fact the consistency of a McDonalds was not what Starbucks needed as they’ve found a growth ceiling and are preparing to close stores all over the world. The issue here seems to have been more about positioning than about market entry. Starbucks seems to have become stuck in the middle of attempting to be a unique, club like atmosphere with the ubiquitous store presence of a price competitive eatery like McDonalds.

Each long tail needs to have its own dog

The long tail, pareto effect or 80/20 principle all are used to describe two sides of the same coin. On one side; a few customers represent the bulk of the revenue available and this will generally come from a few block buster products or offerings. It’s on the other side of the coin that the long tail proves alluring. That’s where the 6 billion potential consumers on the planet separate out into tiny niche markets clamoring for niche products that only a few specialist providers can or want to make. Marketers frequently aggregate the long tails of multiple countries and arrive at a big number as justification for going global. The revenue opportunity is real and meaningful but still needs the same business disciplines of segmentation, branding, market research, competitor tracking, local support, logistics, conformance with local tax and legal structures and local supply chain. These cost money and if you’re unable to aggregate these into a single, scalable support structure – the cost rapidly outweighs the revenues.

Make them come to you

By 2002 EDS New Zealand was already this country’s largest IT outsourcing and services company. To drive growth it started to export services. Working with the international EDS network, EDS New Zealand quickly picked up high value IT work with over 30 international clients. Better still – an Investment New Zealand grant pumped $1.5 million into the venture which delivered production engineering, software development, IT outsourcing and contact centre work.

With this success in importing IT customers and our well documented success in importing students to our educational system – what other options might there be? Other countries in our region are importing customers too. Globally there’s a growing medical tourism market as individual customers exploit the huge price disparity between specialist procedures in their home market and the cost of the same treatments in say Malaysia or Thailand. The market beachhead made by these perhaps long tail customers is rapidly approaching mainstream proportions. Britain’s huge National Health Service already exports some of its patients to other EU countries and on occasion to outside of the EU. Aetna, a giant American insurer, has this year launched a pilot scheme in partnership with Singaporean hospitals to do the same. Some American employers offer “global medical travel” as an employment benefit.

Practice, practice, practice

In the Asia Pacific region, our company has been working to build the business in established economies like Japan, Singapore and Australia at the same time as we grow in China, Korea and Indonesia. For the latter markets – you have to be there to learn the lessons and we architect our approach almost annually as we learn. As golfing great Gary Player famously said “The more I practice, the luckier I get”.

Welcome

2009-04-17T16:16:00.003+12:00

Welcome to our new blog. Much of what we know and learn about loyalty marketing comes from the big loyalty markets of the USA and UK and from our strategy unit Peppers and Rogers Group. This blog is planned to focus on the New Zealand market and how to drive increasing profits through loyalty programs. We are after all one of the best penetrated loyalty markets in the world.

Aimia New Zealand's Blog

Retail growth of 8% to 30% per customer from data driven marketing

Smartfuel innovation inside the AA Rewards coalition scheme

How Generation Y will reshape customer loyalty

We have re-branded as Aimia - Inspiring Loyalty

Retailer offers delivered inside online banking - our new partnership.

Socialnomics Revolution 3

Digital marketing technology – the best thing since sliced bread?

Loyalty expert Nathalie Moolenschot joins us from Air New Zealand's Airpoints

Driving better returns from retention dollars

Gamification - what loyalty programmes should have been delivering?

1 COMMENTS:

February 10th - We present international mobile marketing case studies at Auckland's AmCham

Rick Ferguson leaves Colloquy and joins our family

Code-On-Pack loyalty programme success for Coke and P&G

1 COMMENTS:

Air New Zealand's Airpoints innovations (again)

New generation fuel rewards - the Smart new orange card

3,000 Foursquare users in New Zealand (maybe).

New Zealand credit card loyalty programmes rated by Cannex in their inaugural study

Foursquare provides mobile loyalty interactions to established loyalty programmes

Auckland University research : loyalty programs designed to make sure customers don't get rewards

Wall Street Journal profiles the "Stingiest" airline frequent flyer programs

Barclaycard Freedom - the (nearly) new credit card loyalty model

Oracle CRM and Loyalty event in Auckland - Carlson's 10 Loyalty Programme "Must Haves"

There are no average customers

You are what you eat

We've partnered with Welcome Real-Time for point of sale rewards

Groupe Aeroplan Concludes Acquisition of Carlson Marketing

Groupe Aeroplan to acquire Carlson Marketing

GROUPE AEROPLAN TO ACQUIRECARLSON MARKETING

COMBINATION CREATES THE WORLD'S LEADING LOYALTY MANAGEMENT PROVIDER

Don Peppers responds

"Coles Should Ditch FlyBuys" Loyalty marketing Guru Don Peppers

Points expiry - short, long or evergreen?

Consumers told - don't let your shopping rewards program change your behaviour

A new 800lb gorilla in Australian Loyalty gets into grocery

What's the future for coalition programs?

Loyalty programs an imperative at the centre of Retailer's marketing

Retailers - the difference between good and bad programs

Australia Round 3 - Direct Earn Credit Cards On Steroids - Singapore Airlines

Round 2 Australia - Credit Card vs Airline Loyalty Programs

Credit card programs take on Frequent Flyer programs

More points being issued, each worth less

Frequent Flyers accumulate points for travel - but have to settle for merchandise and gift cards

Frequent flyer points are now being issued 10 times faster than the capacity to service them.

The new interactive marketing technologies – sustaining a frictionless dialogue with customers.

They’re not like us.

Legal and necessary insider trading for marketing professional

Growing Green Profits

China's not always first for your globalisation strategy

Welcome

GROUPE AEROPLAN TO ACQUIRE
CARLSON MARKETING