success with social loyalty

Success with Social Loyalty

by Brett HannathTIBCO Loyalty Lab

S U C C E S S W I T H S O C I A L L O YA LT Y2

TABLE OF CONTENTS

1 THE MEDIA REVOLUTION .......................................................... 3

2 GOING SOCIAL ........................................................................... 5

3 FACEBOOK

STEPS TOWARDS INTERACTION .........................................5

BEYOND LIKES .....................................................................6

5 TWITTER ........................................................................................9

6 THE REWARD ................................................................................9


There’s no doubt that social media have become an important part of today’s total

marketing mix, not to mention the daily lives of more than half the adults living on

the planet. For this reason, it’s no surprise that social loyalty has been declared

“The Answer” for loyalty program managers trying to boost sales for everything

from high-end travel packages to soft drinks. The fact is, there’s often a lot of

pressure from upper management to jump onto the social loyalty bandwagon.

Before doing so, however, it’s important to ask: If social loyalty is The Answer, what

is “The Question?”

This is really just another way of stating the basic business principle that programs

worth executing should have a clear rationale behind them. With this in mind, The

Question becomes, Why social loyalty? Why do companies even need to think

about it?

The Media RevolutionTo start, consumer eyeballs are increasingly focused on the devices where social

loyalty programs live. The decline of print media is the most dramatic example. In

2008, consumers spent twice as much time reading newspapers and magazines as

they did viewing content on mobile devices. By 2011, the situation was reversed

and they were spending 48 percent more time on their mobile devices. This decline

in the popularity of print is mirrored by the precipitous decline in newspaper ad

revenue, which fell from $60 billion in the late ‘nineties to $20 billion in 2011.

Television viewing is also down in the critical 18-48 demographic. From the

networks’ perspective, recent statistics are dismal. In the four weeks starting March

19, 2012, NBC lost an average of 59,000 viewers (roughly 3 percent) compared to

the same period in 2011. CBS lost 239,000 viewers (8 percent). ABC lost 681,000 (21

percent) and Fox lost 709,000 (20 percent).

Another “medium” important to loyalty marketers, the government postal service, is

also in decline. In the U.S., mail volume dropped 16 percent in the period between

2008 and 2011. Post offices nationwide have been scheduled for closure, reducing

both efficiency and reliability in terms of timing. European mail volumes were down

roughly 9 percent during the same time period. The volume handled by the Hong

Kong postal service – typical of the Asia Pacific region - also declined 9 percent. The

declining popularity of “snail mail” makes this vehicle an increasingly unattractive

delivery system for loyalty marketing campaigns.

In contrast, online media are up. YouTube is one of the most striking examples.

According to the company’s own statistics, 4 billion hours of video are watched


on YouTube every month, and 72 new hours are uploaded every minute. In 2011,

YouTube had more than 1 trillion views, which amounts to roughly 140 views for

every person on the planet.

Social media have become the dominant online force. Sixty-two percent of adults

worldwide are now involved in social media sites such Facebook, Twitter, and the

numerous other niche sites that are emerging almost on a weekly basis. In fact,

social media use comprises 22 percent of all online time, making it the most popular

online activity of all.

Even the grandfather of online communication, email is still going strong in spite of

usage declines in the younger demographic. According to a new international poll

conducted by Ipsos Global Public Affairs on behalf of Reuters, some 85 percent of

all Internet users around the world use e-mail for communication. A separate Ipsos

poll indicates that, in spite of all the hype in the retail world about the importance of

mobile smart phones, 75% of consumers still prefer to receive offers via e-mail rather

than by text message.

The take-away here is that media whose capabilities are limited to one-way

communication are in decline, while those that enable two-way communication are

rising. This is good news for loyalty marketers, because it’s two-way communication

that enables the interaction and engagement at the heart of all successful loyalty

programs. For companies seeking to move their customers from mere buyers to

loyalty program members to brand advocates, the opportunities have never been

greater.

Before discussing these opportunities in more detail, however, a word of caution is

in order. For all their potential, social media initiatives aren’t a panacea, and they

don’t always succeed. A prime example of the pitfalls companies may encounter in

the emerging social media arena is News Corp’s The Daily, an iPad-only publication

intended to lead the way into a new era of digital journalism with a strong focus on

social interaction. At this writing (eight months after launch) the publication has only

signed up 80,000 paying subscribers, far short of its half-million subscriber goal, and

recently laid off almost 30 percent of its staff.

While there may be disputes as to why this particular venture is failing, the important

take-away is that well-funded social media efforts can and do fail on a regular basis.

In other words, there is no guaranteed path to success, a fact which makes having

well-defined objectives and carefully thought-out plans even more important. In

addition, companies need to take into account that there definitely is a learning

curve.


Going SocialLoyalty programs based on social media encompass a broad range of tactics. Just

as with conventional print, broadcast and direct mail, these tactics have strengths

and weaknesses, and can often be best used in combination. There is no one-

size-fits-all approach to creating social loyalty programs. Rather, there are multiple

approaches that must be explored to determine which is best for a particular

business situation.

One of the easiest and most well-established approaches to social loyalty

marketing is frequently not even included amongst the list of social media

options: e-mail. Eighty-five percent of the online population is using e-mail as a

communication mode, which means that the vast majority of any target audience

is using it. E-mail technology is simple, well-understood, and integrated into

countless other ancillary enterprise applications related to marketing. E-mail has

the same one-to-many capabilities as Twitter (without the 140-character limit), and

can be forwarded by recipients to their friends. In other words, e-mail shouldn’t be

overlooked or abandoned as a component to loyalty programs in the era of social

media.

The caveat for e-mail is that it is definitely losing ground at the lower end of the age

spectrum, with a 31 percent drop-off in the 12-17 demographic and a 34 percent

drop-off in the 18-24 segment.

Facebook

Steps Towards InteractionFacebook is of course the gate to a much larger audience than any e-mail list could

possibly provide, and one that can be targeted with unprecedented precision. But

all too many companies have made the mistake of treating Facebook as yet another

one-way broadcast medium. The typical approach is as follows:

• CreateaFacebookpage.

• Trytogetpeopleto“like”it(e.g.withthumbsup“LikeUsonFacebook”signsin

retail outlets).

• Postoffersonthenewsstreamsofthe“likers”asoftenaspossiblewithout

annoying them.

This approach takes a narrow view of what the process of “liking” can mean,

reinforces the social-media-as-broadcast-media approach, and greatly limits the


possibilities for interaction in the very medium that was most specifically created to

promote interaction.

There are in fact three modes of “liking”:

Like the brand. This is currently the most common, but the most limiting

approach. Its major problem is that once a consumer has “liked” a brand,

interaction comes to an end. Companies that have been “liked” may obtain

access to a customer’s news stream – not a small benefit – but one single “like”

is hardly the beginning of a dialog. Also, a simple “like” provides very little

information about exactly what is being liked and why.

Like a specific program. The major advantage of this approach is its potential

for freshness. New product launches, seasonal programs and programs

connected with specific events (e.g. sporting events or holidays) all offer

opportunities for new “likes.” In fact, this approach does offer the possibility of

initiating a dialog with customers. It also enables companies to more accurately

target those customers when posting conventional offers to their news

streams.

Like a specific product. Just as with program-oriented “likes”, product-

oriented “likes” enable multiple interactions.

Beyond Likes

Moving beyond the basic mechanics of asking to be liked is a whole new game

for most companies, one in which both the players and the rules are subject to

constant and unpredictable change. In our experience at TIBCO Loyalty Lab,

however, the basic principles for success can be described by an equation with

three components: innovation, interaction and integration. Below are some

examples of what these terms mean in actual practice.

InnovationTraditional loyalty programs are governed by the simple arithmetic of points-for-

purchase. Although some programs have attractive ancillary benefits, such as

shorter lines at the airport or faster access to a live human being in the call center,

at bottom they simply reward repeat purchases with what amounts to a discount.

The fundamental innovation of social loyalty programs is that they not only reward

sales transaction, but also behaviors that are likely to lead to sales transactions. In

addition, they make overt attempts to create a sense of community which can lead

to loyalty over time, and ultimately a higher lifetime value per member.

Jane Smith


Nine Loves, the social loyalty program of shoe and handbag retailer Nine West, is a

good example. In addition to receiving points for purchases, customers also receive

points simply for liking the Nine Loves program page, and even more points for

filling out a brief multiple-choice questionnaire. Besides rewarding customers for

providing access to their news stream and information about their buying patterns,

Nine Loves has other features that encourage a sense of community. For example,

there is a “Shoe Confessions” feature that encourages Nine West customers to

share humorous anecdotes related to their love of shoes.

As smart phone location technology evolves, the concept of points for behavior can

be used to influence shoppers while they are in the mall. Several major retailers now

offer points to customers simply for walking into an outlet, and even more points for

visiting specific displays. (Proof-of-visit is typically established via QR codes on the

targeted display.)

It’s important to note that rewarding activities other than sales transactions involves

new back-end technology capable of taking the rewards structures beyond the

points-for-purchase level. Fortunately, proven technology now exists to enable

companies to reward almost any activity with points.

InteractionThe innovation component of the social loyalty equation involves cleverness, a new

way of looking at how points are awarded, and the underlying technical capability

to reward non-financial transactions. The interaction component goes farther by

creating social mechanisms that enable friends to enhance their own relationships

with one another while at the same time increasing the visibility of the brand.

The 1-800-Flowers Gimme Love program is a good example. Gimme Love is based

on a Facebook app that enables members to send a virtual gift: an image of a

floral bouquet with a brief greeting not unlike a simple e-card. This app also allows

members to send an actual bouquet, but whether the “love” is virtual or part of the

physical world, the member earns points.

What’s particularly powerful about this app is its viral potential. Recipients who have

not downloaded the app must do so in order to receive their gift. They are then in

the position to send virtual (or real) flowers to their circle of friends.

There are many other examples of social loyalty programs that leverage members’

existing social graphs by offering them points when they enroll their friends in

online activities such as games that revolve around a product or brand.


IntegrationAs with conventional media, social media are often more effective when used

in combination. The Green Giant Fresh promotion is an example of how the

integration of in-store and online engagement can deliver concrete results.

The ultimate aim of the program was simply to sell more vegetables. Customers

initially engaged by buying vegetables with on-pack labels at selected Target

stores. The labels carried a unique code which customers could use to enroll in the

program (using their Facebook credentials or via e-mail) and thereby obtain Free

Farm Cash in Farmville, the enormously popular Facebook game based on virtual

farming.

This loyalty program played on both statistics and psychology to succeed. Green

Giant Fresh could easily determine the potential universe for its products using

available store sales data. Because of Farmville’s popularity at the time, Green Giant

Fresh could also assume that a reasonable portion of the store customer universe

would consist of individuals engaged in Farmville. In this regard, there was little

guesswork.

On the psychological side, the program linked the brand with a social environment

whose central activity was growing food (albeit virtual food), and one where

players were more or less compelled to visit frequently in order to keep their crops

growing. These factors ensured the kind of repetitive reinforcement that has proven

effective ever since the earliest days of mass media. The program worked, and

resulted in a 10 percent uplift in sales the first month.

These three programs comprise a progression from innovation to interaction to

integration, and also demonstrate increasing levels of trust on the part of the

consumer. The Nine Loves program, although extremely creative, is really quite

similar to conventional loyalty programs. In the Gimme Love program, members

are required to ask their friends to download a new app, which is not a small

request these days given the plethora of dubious apps that exist. The Green Giant

Fresh program asks (but does not require) that participants provide access to their

Facebook credentials, which involves a significantly higher level of trust. In other

words, these programs not only demonstrate ways to influence behavior, but to lay

the emotional foundation for a long-term relationship.

TwitterNo discussion of social loyalty programs would be complete without mention of

Twitter. Because of its content limits, Twitter by itself is usually not the best choice as

a focal point for social loyalty programs. However, Tweets are extremely effective in

broadcasting time-sensitive messages (such as a sale for loyalty program members

that will only last a few hours), and they also have a potential viral capability because

re-tweeting a message is so easy.

Loyalty marketers who have social loyalty programs in place would be wise to

experiment with rewarding tweets as a means of amplifying a message and

delivering it to a larger audience, but this is an area where careful measurement of

the cost/benefit is wise.

The RewardIn summary, social loyalty programs work, and their potential will only increase

over time. The infrastructure that supports them is growing – they offer benefits in

terms of interaction and speed that conventional programs cannot match, and they

are capable of targeting any desired demographic with a great deal of precision.

In other words, companies that reward desired social behaviors are likely to reap

significant rewards themselves.

©2012 TIBCO, TIBCO Software, and The Two-Second Advantage are trademarks or registered trademarks of TIBCO Software Inc. and its subsidiaries in the United States and/or other countries. All other product and company names and marks mentioned in this document are the property of their respective owners and are mentioned for identification purposes only.

Tel: +1 650-846-1000 +1 800-420-8450Fax: +1 650-846-1005

Global Headquarters3307 Hillview AvenuePalo Alto, CA 94304

www.tibco.com

TIBCO Loyalty Lab helps develop profitable and long-lasting customer relationships for some of the world’s largest brands. Our on-demand loyalty platform supports end-to-end loyalty programs that can influence behavior across all channels – mobile, social, online and in-store. TIBCO Loyalty Lab’s deep loyalty knowledge base and technology solutions enable organizations to cultivate a deeper and sustained brand relationship with millions of their customers the day their programs go live.

For more information head to www.loyaltylab.com, email [email protected] or call us on +1.415.633.1400.

success with social loyalty

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