advertisement
advertisement

The Backward World Of Loyalty: “I’d Like A VCR, A Wired Phone and a Plastic Loyalty Card, Please”

Written by Todd L. Michaud
February 7th, 2012

Todd Michaud spent years leading retail technology teams for Dunkin’ Donuts and Baskin-Robbins and today serves as the VP of IT for a billion-dollar franchise restaurant company. He also runs Power Thinking Media, which helps restaurants and retailers with social and mobile challenges.

When it comes to loyalty, many retailers are stuck in the 1990s. Does anyone else find it funny that in a world where you can very easily have a video conference with your kids from a $500 tablet over free Wi-Fi from a random hotel, we’re expected to keep a 3.3- x 2.2-inch piece of plastic in our wallets to get benefits from some of our favorite retailers? It’s funny how technology can drive a blistering pace in some areas, but slow down to a crawl in others. Especially in an area—such as CRM—where the application of technology could directly impact a retailer’s top and bottom lines.

The problem is that many of these retailers are still considering launching a card-based program. After all, in their mind it’s, better than a Flock Of Seagulls-style haircut—I mean, punch card-based system. But if you asked these same marketers who are looking at these packages if they are carrying more than one of another retailer’s loyalty card in their own wallet, they would say “no.”

I believe the reason most retailers are stuck in a card-based approach is because there is no existing vendor in the stable that offers a comprehensive, technology-based up-to-date approach. Loyalty is not an extension of POS, nor is it an extension of your Web site development. And it is certainly not an extension of giftcard processing. Loyalty is a data-intense program that is as important as merchandising and should be treated in the same way. It is about mobile and geo-location, along with data-driven marketing and real-time offers at the POS. Loyalty is about leveraging technology to maximize your relationship with each customer.

Most retailers I speak with are looking to either launch a loyalty platform or completely rebuild their existing program. Because of the fragmented nature of the technology approaches currently in the value chain, these retailers look to reduce their complexity by leveraging a vendor they are already doing business with. After all, the last thing the CIO wants is to manage yet another vendor. So they reach out to their POS vendors, their digital agencies, their E-mail marketing vendors and their giftcard processors. Most of these companies have some form of a loyalty package available today.

But almost each one has a massive drawback. If you use your POS provider, that approach requires a ubiquitous platform throughout the chain—something that it is extremely rare. If you partner with your giftcard processor, you are going to find challenges when leveraging other data sets from inside (and outside) of your organizations to enrich your loyalty campaigns. It’s much worse when retailers try to leverage their existing giftcards for loyalty. With this approach, retailers further burden their customers by forcing them to loan the retailer money (loading the card) to receive benefit. Talk about a barrier to entry!

Go with a digital agency, and you will quickly find that choosing a company largely focused on marketing and then asking that firm to take on an operational role (and manage systems that become mission critical) will mean asking the company to deliver services it is not designed to support. For those of you who have purchased a monthly a service from a professional services firm, you will know what I mean.

That is not to say that each of these vendors will not have an important role to play in the overall loyalty approach.


advertisement

4 Comments | Read The Backward World Of Loyalty: “I’d Like A VCR, A Wired Phone and a Plastic Loyalty Card, Please”

  1. Walt Conway Says:

    Todd,

    This reminds me of the few loyalty programs I actually use. Two use a phone number the clerk enters at checkout. I see the discounts immediately at the POS (Safeway), or I get a discount coupon in the mail (BevMo). The airlines I am unfortunate enough to live on recognize me immediately online and at check-in, so I’ve never seen the point in the cards they send.

    The common thread in each case is immediacy. I carry no additional plastic in my wallet I can avoid. Then again, I’m not a typical consumer so maybe others have different experiences as retailers or consumers.

  2. Omar Iftikhar Says:

    Loyalty should be the main driver for all your targeted services and promotions. Not a lot of retailers do that very well. The best at it in my experience is Best Buy. Being part of their Rewards Zone not only automatically assigns the points to your purchase, but also sends you an electronic copy of your receipt, and any follow up coupons and specials. They are not perfect since you still have to manually link your loyalty acct with your on-line and credit card account but they are going in the right direction.

  3. Thad Peterson Says:

    Great piece! And too true, unfortunately.

    We’re at a nexus in the evolution of customer reward and incentives and the tools that are being used are based on 1980′s batch processing technology. The keys to developing programs that actually drive business are as you state:

    1) Build it off customer behavior, tracked in the CRM
    2) Make it form factor agnostic
    3) Integrate customer communications, promotion and rewards so that relevant and actionable opportunities are being delivered to the customer.

    We all need to remember that we NEVER own the customer. If we’re lucky, the customer owns us.

  4. Joe Says:

    Agreed with eliminating the physical coupon. Staples rewards me with rebates that I need to log on to the website to print and bring to the store. I should be able to state at the register I want to redeem the rebate on my profile. The same when they give me a Staples card for rebates. Why bother sending me plastic when I should be able to use it virtually thru access to my profile.

Leave a Reply

Readers, specifically those who want to comment on a story:
Our Comment SPAM system is getting very aggressive these days and has been blocking legitimate comments. If you post a comment and don't see it appear within 2 hours or so, can you please send a heads-up to customer-service@storefrontbacktalk.com? Ideally, please include the time you posted the comment. That will allow us to try and hunt for it. Thanks! P.S. We're working on fixing the system, but we don't want to lose any valuable comments in the meantime.

Newsletters

StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 17,000 retail IT leaders who subscribe to our free weekly email. Sign up today!
advertisement

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

StorefrontBacktalk
Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.