Chris wrote about his approach to New Year’s resolutions in this post, instead choosing 3 words that would help him to focus on what’s most important for the year ahead. I like the idea and am still trying to reduce my personal list of keywords to single digits. Meanwhile, I found it easier to create a 3 word list for Loyalty Marketing in 2012 and wanted to share it for your consumption and discussion.

Let me know what your 3 words would be for this year and why you chose them. I’ve started a discussion on our Customer Strategy Network Facebook page and in a few LinkedIn groups where you can participate. If you prefer, just leave comments here on Loyalty Truth.

Data

Loyalty marketers have been collecting customer data since the dawn of the business. To a great extent, that data has been under-utilized and this shortcoming threatens the trusted relationships we have with our customers. Consumer 2.0 is well aware that the portfolio of transaction and personal data that defines self is highly valuable to corporate America. Though we’ve been talking about increased leveraging of data as one of the biggest opportunities in Loyalty Marketing, 2012 might be the year that it happens.

Selecting Data as one of my 3 words for 2012 puts me in pretty strong company as I recently listened to Rupert Duchesne, Chairman of Aimia, speak about Data being the “New Oil”. And, just last week, I read that Foursquare was making public its intent to put its data to work as a tool for growing its business in 2012.

Mobile

The mobile handset has been predicted by many to become the central platform for social shopping and payments. The Google Wallet was announced last year and payment/loyalty plays including Square, Dwolla, and LevelUP seek to change consumer behavior and set a new mold for how we shop and pay.

Banks are pledging to make better use of mobile applications to bring banking products closer to the customer, in the process redefining how we view the retail banking customer experience. Groupon has responded to criticism that it is impotent beyond stimulating customer acquisition and trial and has introduced Groupon Rewards as well as partnering with Foursquare to find synergy in location based marketing and the daily deal.

The convergence of loyalty, payments, and the mobile handset will continue at a faster pace during 2012.

Social

We invested significant time gathering information and creating position papers on Social Loyalty, Social CRM, and Social Shopping during 2011. Clients as well as conference delegates wanted to absorb as much as they could on these topics and the buzz made us question if everything involving “loyalty” and “social” might dissolve away as just the latest marketing fad.

It’s not going to happen. In fact, 2012 will be the year when many brands put their PowerPoint presentations on the shelf and move to implement more social channels into their customer strategies. Consumer 2.0 is making purchase decisions differently than before and will be delighted by elegant ways to locate and evaluate local shopping offers via their mobile device. The social aspect comes in the form of interactions via social shopping networks like Zavee.com or by engagement with game-fueled loyalty programs where referral and recommendations lead visibly to purchase.

Three words that will define Loyalty Marketing in 2012: Data, Mobile and Social. I’m sure you can make an argument for others.

Let’s hear it.

By Roger Williams

Gamification is defined as “the use of game mechanics for non-game applications”. Businesses are making their websites and applications feel less like “transactions” and more like games – although some will argue that you can’t put lipstick on a pig. Perhaps some transactions, like filing your taxes, are destined to be purely arduous, no matter how many virtual accolades, points, or medals you earn.

However, the true paradigm shift of gamification, is that it places more emphasis on product education and behavior-modification by rewarding these non-payment transactions. Reading advertisements, completing surveys, meeting deadlines are all examples of customer actions that can be considered as loyalty gamification. Frequent Flyer programs inherently have game-like qualities, but gamification of these programs gain the best results from rewarding a variety of pre-sale behavior.

FFPs have been ‘Gamifying’ for years with tier recognition
On your next trip to the airport take some time to observe elite frequent travelers and you will quickly appreciate the power of loyalty gamification – which incidentally FFPs have been executing successfully for years. Never taking the time to actually sit in the waiting area, elites like to impatiently stand close to the boarding door so they can fully exercise their right to board first, or at least immediately after first class. The whole thing can appear quite ridiculous in hub cities where 60 elites jockey for position to enter the Jetway first, all while passive-aggressively brandishing their credentials attached to their roller bags.

Managing elite status through gamification in many cases is more powerful than point accrual. Perhaps the biggest secret to successful elite status marketing lies in the takaway.  Every elite wants to keep their status and will go to extreme measures to do so  – all generating revenue for the airline. Barriers, like elite qualification, placed between the customer and rekindling a favorable experience that they have become familiar with can be a powerful leverage tool.

Customers inherently lack self-image and identity
Most people don’t give much thought to who they really are, especially if they are career-oriented business types. Sure, your average doctor knows he or she is a doctor, but is that who they really are? More people are allowing their careers to define their very existence, and in the process lose their own identity.

Video game creators cringe at the emerging use of gamification within marketing and loyalty circles. The primary criticism of top video game designers of gamification is that it lacks storytelling, a critical component of successful video games. In fact, storytelling is the next logical step in profile-driven loyalty marketing. In practice marketers are not concocting some fantasy, but instead using customer data to create the customer’s identity and a narrative for the customer’s new self to play in.

Most people are actually consumers, unwittingly floating in an artificial dimension of commercialism that marketers have created. Think of it as marketers being performers in a nightly Broadway show with a full house every night.  However, peoples’ opinion of that show is the only thing that matters.  It is then up to you to deliver a performance that engages, stimulates, and triggers the audience to give critical acclaim to your work on as many nights as you can.

In a thoughtful article – Fiona points to the fact that as loyalty programmes rollout the use of loyalty data across social media and integrate with POS, they could loose their brand! as the loyalty brand disappears with the lose of loyalty card etc. It merely points I think to the fact that loyalty programme owners will have to work harder to make their loyalty brand relevant, and engaging in a way they often have in the past.

iMedia UK By Fiona Moss on December 20, 2011

With new technologies meaning that loyalty schemes can be embedded further and further into our lives. How legal is it? And how far is too far?

It’s not news that the advent of technologies such as social media has given the brands that we use unprecedented access to our lives. Gone are the days when our only contact with a brand was on the high street. These days they are emailing us, texting us, writing to us (but only if we’re ‘old school’) and even ‘reaching out’ to us via social media.

And many of us have happily jumped on the bandwagon, joining, for example, the Facebook groups of our favourite brands. For instance, at the time of writing there are more than 400,000 ‘likes’ for the Marks & Spencers’ Facebook site. We get to know more about the brand and its products, and if we’re lucky we get some useful discounts and offers for the products we like. Most of us know that the trade-off for these ‘perks’ is the brand knowing more about who we are, and what kind of products/brands we like. Brands that engage with us in this way are effectively offering financial incentives to gain greater proximity to our lives.

Recent online discussion groups that we undertook for loyalty scheme providers, The Logic Group, indicated that many existing (and potential) users of retail social media groups/sites are advocates of such easy systems that ensure they have relevant offers regularly made available to them. Essentially, using social media as a loyalty scheme tool can appeal to busy consumers, who like the convenience of receiving loyalty scheme perks in a way that fits into their existing lifestyle.

But new technology is taking this integration of loyalty schemes into our lives one step further. Take two new developments (the exact user experience of which is still being decided as we type):

Loyalty schemes that use our credit or debit card to identify us (rather than a traditional separate card or fob) so we collect points as we spend (different from a store card as the credit/debit card provider would be independent from the loyalty scheme provider)

Mobile wallets which allow small purchase payment and points/coupon collection via our smartphone.

And this is where it gets interesting: with social media, adherence to a loyalty scheme and use of vouchers or discounts remains a deliberate, conscious act. Groups have to be joined, vouchers printed, specific shops or items sought out; in other words, we still have to actively engage with the brand. The brand reminds us of its existence, and we decide whether we have sufficient incentive to spend with it.

But in both our ‘new technology’ developments, any visible or tangible sign that we are indeed part of a scheme will be more hidden, as today’s reminders of the brand and its scheme (e.g. loyalty cards) will not be required. The loyalty schemes will become so integrated into our everyday lives that we may no longer have to think about them — or their brand — in order to use them. So what happens when a loyalty scheme becomes so embedded in our lives that it is no longer a conscious thing?

Certainly it is convenient, as the participants in our discussion groups pointed out; with both new technologies meaning fewer cards in our wallets. Undoubtedly, the brands will gain huge insight into our shopping and spending habits. And yet, will consumers engage with a brand if they do not have an obvious reminder of their adherence to a loyalty scheme, and by extension, the brand? While the benefits of embedding loyalty schemes into our everyday lives are undeniable, the importance of keeping customer interaction, so the value of the scheme — and the brand — can still be conveyed to the customer, should not be forgotten.

It seems therefore that the challenge for any scheme involving new technologies such as those mentioned here, will be to devise a user experience that ensures that we continue to actively, consciously engage with the brand, even while our participation in its loyalty scheme becomes so embedded in our lives that it is an unconscious act.

Fiona Moss is a research manager at Ipsos MORI

Today I’m not only thinking about competition within traditional methods of payment, but also payment methods that come bundled with loyalty and social shopping applications.

Let’s look at the tradition payment space first. Within my network of highly mobile loyalty consultants, the Customer Strategy Network, we are fortunate to share project work and often move money between us as a result. I can remit payment to a colleague internationally via bank wire transfer, PayPal, or by check. Since bank hold policies on foreign checks border on ridiculous, wire transfer and PayPal seem to be the two best options.

One would think that wire transfer fees are more formidable than using PayPal, but interestingly enough, a transfer of $2,500 from the bank costs $40 while using Paypal rings up a charge of about $157 (nearly 6%) if I link my Paypal account to a credit card, and closer to $75 (3%) if linked to a bank account. Just when we thought the banks were wringing out every last dollar from consumers following passage of the Durbin Amendment, PayPal is revealed to be generally more expensive to use.

Surprised? I was.

Next, consider payment methods tied into loyalty marketing schemes. Dwolla is actually the only one of which I am aware, and the innovative payment/loyalty group charges a fixed fee of $.25 per P2P money transfer or purchase transaction within its merchant network. That charge is normally paid by the payment recipient and doesn’t apply to transfers under $10. This of course would be a game changer in the payments sector, but only if Dwolla can enable payments outside of the US. Current restrictions on maximum transaction amounts are acceptable, but no payments are permitted outside of US borders. For the record, personal payments of $5,000 and business payments of $10,000 are allowed.

If Dwolla has aspirations to challenge PayPal and to become a payments solution beyond US borders, they will have to expand their model. For now, the low cost structure of domestic payments and embedded loyalty offers through the Spots program make Dwolla a better option than PayPal within the US. Using Dwolla Spots to locate merchants who accept the payment method and to be able to shop conveniently with local merchants even if you left your wallet at home is one of the big advantages of the program.

All you need is a GPS enabled Smartphone that allows you to find merchants and you can order and pay for purchases even before you enter the store.Imagine, the barista that not only knows your regular order but also has it waiting piping hot for you as you walk through the door, payment already completed. That’s got the makings of customer engagement and loyalty right there.

One other payment alternative linked to a loyalty program is the prepaid card. Starbucks and Dunkin’ Donuts each have put a prepaid card at the center of their loyalty programs. The downside of this model is that consumers must use the prepaid card for all purchases if they hope to earn loyalty credits. The upside is that Starbucks has added the convenience of being able to pay for purchases with a bar code provided in its mobile application (link) with the amount of purchase debited to the prepaid card account. Again, the convenience of being able to pay even when the wallet has been left at home, is something to consider.

With barcode technology widely available and NFC still needing some sorting, Starbucks has proven that low-tech (barcode) can be combined with high tech (mobile apps) to deliver convenience and to contribute to customer loyalty. The convergence of payment, mobile handsets and loyalty applications is not a concept on a PowerPoint slide anymore. It’s here before us, and becoming more of a reality every day.

[This story from TechCrunch, to visit please click here] – As we’ve written in the past, Topguest is a loyalty program that rewards users for engaging with brands on social networks. The startup lets you earn points simply by checking-in to hotels, airports and more on social networks like Foursquare, Instagram and Facebook.

Topguest allows users to integrate with rewards programs such as United MileagePlus, Continental One Pass, Virgin America, IHG Priority Club and Hilton HHonors to earn reward points check-ins and receive exclusive offers and bonuses as well. For example, a Virgin America Elevate member waiting to board a flight can use Topguest to check-in on Foursquare and earn bonus Elevate miles.

Topguest recently announced a white-label product that allow brands to customize their communication with each of their customers, based on their social networking activity. Loyalty programs can carefully target and customize offers that are relevant to each member.

The startup has raised $2 million in funding from the Founders Fund, SV Angel, SoftTechVC, Keith Rabois, Kal Vepuri, Naval Ravikant, and Joe Lonsdale. Peter Thiel is an advisor as well.

Founded in 2003, ezRez works behind the scenes with more than 200,000 travel suppliers, loyalty programs and payment providers globally, including AirAsia, American Airlines, United Airlines, Starwood Hotels, Intercontinental Hotels, JetBlue, American Express and PayPal. The company’s back-end technology that lets you book hotels and rental cars with points and cash through various travel companies’ rewards programs. Collectively, more than 20 billion reward points are redeemed through the ezRez platform annually.

ezRez is also rolling out a new digital wallet product that will allow loyalty program members to use their loyalty program points to pay for merchandise and services anywhere PayPal is accepted.

Topguest actually works with many of the same loyalty programs but adds the social and mobile component, rewarding consumers for “check ins” and other social behavior on Facebook, Foursquare, Instagram and Twitter. Full Story HERE

Australian-owned event and incentive specialist, cievents, has created the country’s first loyalty program for the entertainment and sports travel industry.

Developed by ciloyalty, cievents’ loyalty division, the program targets Stage and Screen clients including sports organisations and teams, and companies operating in the film, television, broadcasting, performing arts, music, fashion and creative media sectors. Backstage Advantage is an interactive web-based program in which these companies’ travel bookers earn reward points every time they book travel with Stage and Screen. Once travel bookers have accrued enough points they can shop virtually from an online Stage and Screen catalogue which includes a huge range of products from homewares, to cosmetics and accessories, to the latest electronics.

Travel bookers can also have the chance to earn extra points during special bonus months, and attend exciting industry events with Stage and Screen. They are kept up to date with the latest industry travel deals and news through a regular newsletter.

While the bookers are personally rewarded for their loyalty, their companies also benefit from travel cost savings. By making all bookings through Stage and Screen, travel policy compliance is higher and better savings are achieved.  Full story from Travel Daily News HERE