2. 2 S U C C E S S W I T H S O C I A L L O YA LT Y
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
3. 3 S U C C E S S W I T H S O C I A L L O YA LT Y
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 Revolution
To 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
4. 4 S U C C E S S W I T H S O C I A L L O YA LT Y
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.
5. 5 S U C C E S S W I T H S O C I A L L O YA LT Y
Going Social
Loyalty 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 Interaction
Facebook 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:
• Create a Facebook page.
• Try to get people to “like” it (e.g. with thumbs up “Like Us on Facebook” signs in
retail outlets).
• Post offers on the news streams of the “likers” as often as possible without
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
6. 6 S U C C E S S W I T H S O C I A L L O YA LT Y
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
Jane Smith 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.
Innovation
Traditional 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.
7. 7 S U C C E S S W I T H S O C I A L L O YA LT Y
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.
Interaction
The 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.
8. 8 S U C C E S S W I T H S O C I A L L O YA LT Y
Integration
As 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.
Twitter
No 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
