Members of Loyalty Programs
Are Best Brand Champions

By Lynne Cooke

New Word-of-Mouth (WOM) research shows that reward programs are the best source marketers have for finding consumers who will recommend their brands, according to consumer researcher Colloquy.

Data drawn from the researcher’s recent study, “The New Champion Customers: Measuring Word-of-Mouth Activity Among Reward Program Members,” shows that 68% of WOM champions in reward programs will recommend a program sponsor’s brand within one year.

Consumers who are loyalty reward program members are far more likely to be WOM champions for their favorite brands than non-members. The more active their program participation, the more likely they are to exhibit WOM behavior.

Here are some of the key findings:
  • Reward program members are 70% more likely to be WOM champions (defined as customers who are “actively recommending” a product, service or brand) than the general population
  • Fifty-five percent of reward program members are self-described WOM champions
  • Only 32% of non-reward program members are self-described WOM champions
  • Sixty-eight percent of WOM champions in reward programs will recommend a program sponsor’s brand within a year
  • Actively participating reward program members are over three times more likely to be WOM champions
  • Reward program members who have redeemed for experiential rewards are 30% more likely to be WOM champions than those who have redeemed for discounts.

Colloquy maintains that a company’s loyalty marketing database is an under-utilized
social network that marketers would do well to exploit in the pursuit of positive, profitable
WOM activity.

“If your goal is to cultivate and encourage ongoing, profitable customer WOM activity, all
of the tools exist within the loyalty marketing database,” said Colloquy Editorial Director
Rick Ferguson, who co-authored the study with company partner Kelly Hlavinka. “Loyalty marketers should find the champions buried within their program memberships, and build relationships that reward them for positive WOM activity,”

In October 2008, Colloquy conducted a consumer research survey designed to explore the intersection of consumers who participate in reward programs and their WOM activity regarding brands, reward programs and specific product categories. This survey of 3,610 U.S. and 3,583 Canadian consumers was subdivided into specific demographic segments and by specific WOM behaviors.

The research also examined the motivations of WOM champions and uncovered why they engaged in WOM activity regarding their favorite products and brands and what categories of offers and information they were most likely to pass along to others within their networks. 

The top five motivations of WOM champions were:
  • To tell manufacturers what I think (73%)
  • To get smart about products/services (68%)
  • To be the first to discover new items (68%)
  • To get free product samples (63%)
  • To share my opinion with others (61%)

“WOM champions crave a deeper relationship with their favorite brands and are searching for ways to provide feedback,” said Hlavinka. “Four of these top five responses also reflect the importance of confirming self-worth, and, of course, 63% of champions admit that they engage in WOM activities to earn free stuff.”

The study is available as a free download at www.colloquy.com/whitepaper.


New Research Tool Determines
Brand Loyalty of Consumers

By John Karolefski

A proprietary research technique that identifies actual purchasers of a particular brand based on the actual amount that they spend has been developed by Partners In Loyalty Marketing (PILM).

The Top Shopper Dialog (TSD), which tells manufacturers the “why” behind consumer behavior, is now available after successful performance with select CPG companies over the past year.

“This new approach avoids one participant commandeering the session or driving responses by others as often happens in focus groups. It also avoids the ‘yes-no-yes-no’ cadence that sometimes marks telephone quantitative research,” said Michael Schiff, managing partner of PILM.  The Chicago-based strategic consulting and research firm helps retailers and manufacturers grow same-store sales and consumer loyalty.

Consumers are selected to participate in a TSD based on shopper loyalty card data from cooperating retailers.  The interviews themselves are telephone one-on-ones in which a PILM staff member directly engages participants in a natural, free-flowing conversation. 

“Since we know interviewees are purchased confirmed, we can start the conversation at a different point than one might with other research methodologies,” said Schiff.

A recent TSD was successfully performed with a large beverage manufacturer at two retail chains.  Concerned over a slumping economy, this manufacturer was developing a loyalty program and wanted to know how to differ messaging between key demographic targets. The brand learned that it was less about which demographic bucket they were in, and more about how frequently they purchased. 

“They thought they had a uniform group of Heavy Buyers, which they had a lock on,” said Schiff.  “The truth was that they actually had three groups of Heavy Buyers with varying degrees of loyalty and rationale for how often they interacted with the brand.”

The TSD was originally designed as Heavy Buyer research to help manufacturers transform their base message into something that this small, but extremely important, group of buyers could respond to. 

“Most Heavy Buyer communication is simply brands’ existing creative, just repurposed,” said Schiff.  “Heavy Buyers have already bought into that message. The key is to build upon that, find that next level of communication that increases loyalty, build a relationship to the brand, and create advocates.”

The TSD has also targeted Lighter Buyers to see what may propel them to “heavier” status.  Most recent requests, however, have been in determining the driving forces behind why some loyalty consumers are leaving the brand. 

“In today’s declining market, it is no surprise that manufacturers are more worried about attrition than before,” said Schiff.  “What may be surprising is that, while it does play a factor, price is not the only reason consumers leave a brand. It may not even be the first one they mention when you speak with them. In fact, more often than not, the reasons why somebody stays and others leave are closely linked. This is good news for any manufacturer looking to increase their overall retention rate.”

More information: Michael Schiff at 312-932-0285, Michaels@PartnersILM.com, or visit www.PartnersILM.com.


FEBRUARY 20009

LEAD Marketing Conference Will Debut in October

By Jack Grant

The newest and most comprehensive conference focusing on all aspects of Loyalty, Engagement, Analytics and Digital Marketing has been announced.

The LEAD Marketing Conference is scheduled to take place October 5-7, 2009 at the Westin O’Hare in Rosemont (Chicago), Ill.    

“The LEAD Marketing Conference is the first retail-centric conference to focus on understanding and leveraging these effective and emerging technologies which are crucial to attracting and maintaining shoppers, as well as providing much-needed differentiation in today’s competitive marketplace,” said conference producers. 

The event is geared to all channels of retailing including Supermarkets, Drug, Dollar Store, Mass and Discount, Convenience Stores, Specialty Stores and Department Stores.

LEAD aims to fill the vacuum created when the Global Electronic Marketing Conference was discontinued. The last GEMCON, its fifteenth annual event, was held in October 2006. LEAD will build on GEMCON by adding the latest advances in technology and shopper engagement and appealing to other trade channels besides grocery. CPG manufacturers will join their trading partners at LEAD as speakers and attendees.  

The conference will be produced by a consortium of three companies: RetailConnections, Somerset Productions and Primary Communications.

The educational agenda will consist of general sessions, two tracks (one for Loyalty and Analytics and the other for Engagement and Digital), and table-top exhibits. A preliminary schedule with scheduled speakers will be released soon. Networking receptions and dinners will bring together retailers, manufacturers, and vendors. The first annual retail LEADER awards will also be presented as part of the conference. 

The educational topics will include the following:
  • Advances in Customer Relationship Management
  • Customer Experience Optimization
  • Innovations in In-Store Marketing
  • New Vehicles for Spurring Sales at the POP
  • Blending Off-line and On-line Programs
  • Leveraging New Media Vehicles for Success
  • Pricing and Promotion Optimization 

According to the conference producers, engaging and satisfying today’s consumer has never been more challenging given today’s tough economic times. Leading-edge retailers are using advanced analytics to segment shoppers, improve store loyalty, and increase basket size. They are taking CRM to a new level with enhanced behavioral targeting.  

New solutions are now available to retailers and are often deployed in partnership with CPG manufacturers. This high-tech array includes in-store messaging via digital signage, kiosks, advertising networks, interactive shopping carts, paperless coupons, mobile coupons and TV and radio broadcasting. 

At the LEAD Marketing Conference, retailers will learn how to supplement their in-store marketing with online strategies including internet coupons, email campaigns, and
web strategies. 

More information about the agenda and exhibit/sponsorship opportunities is available by email (info@leadmarketingconference.com), phone (440-582-3122) or web
(www.leadmarketingconference.com).


Market Watch
Fuel Promotions Roll with Some Twists and Turns

By John Karolefski

Loyalty promotions that give shoppers discounts on gasoline for buying certain brands of groceries are still popular, especially when linked to the retailer’s loyalty card. Giant Eagle and Price Chopper, for example, continue to be examples of successful programs. 
Both are powered by technology from Excentus Corp.

The start of a new year has seen new promotions that aren’t prompted by the high cost of fuel. In many cases, the sagging economy is pumping up this popular promotion.

Bigg’s, an 11-store grocery chain based in Cincinnati, has unveiled a fuel promotion called Pump Perks that offers shoppers a discount of 1-cent per gallon for every $10 spent in the store. For example, spending $100 earns a reduction of 20 cents per gallon of gas.

In addition, between 3,000 and 5,000 items per store are identified with a Pumps Perk tags. Buying those items earns even more of a discount. The program is triggered when a loyalty card is scanned at checkout.  

Shoppers at Family Fare and D&W Fresh Markets in Grand Rapids and Holland, Mich. are being rewarded with gasoline for 99 cents a gallon when they spend $100 in the grocery store. The promotion is taking place in the 30 supermarkets operated by Grand Rapids-based Spartan Stores.

When shoppers check out of the store, they get a bar-coded receipt/coupon which is redeemed at one of nearby 11 Quick Stop fuel centers. The average price for gas in the area reportedly is $1.80 a gallon. 

Meanwhile, Ukrop’s Super Markets has cut the amount of savings earned through its gasoline discount program by 50%. The “fuelperks!” program debuted in mid-2008 when gas cost more than $3 per gallon. It initially offered customers a 10-cent per gallon discount for every $50 they spent at a store. The discount was lowered to five cents per gallon.

“This adjustment coincides with the more than 50-percent reduction in the cost of fuel since we began the program and still allows fuelperks! to remain the best program in the market to save on gas,”  Robert S. Ukrop, the chain's president and CEO, wrote in a letter to customers.

Save for College at Food Lion
Shoppers at any of Food Lion’s more than 1,200 supermarkets in 11 states can now save for their children’s college education by purchasing certain brands of groceries under a program from Upromise.  The cashier simply scans the shopper’s MVP Loyalty Card and contributions will be added to the customer’s online account for purchases of participating products. 

The amount of contribution varies from one to five percent of the cost of thousands of participating products. For example, if a customer buys Nestle Morsels, a contribution of 3% will be credited to that customer’s Upromise account. A complete list of participating products is available at Upromise.com

Scan It! Expands
Stop & Shop Supermarket Company has completed the roll out of its Scan It! scan-and-bag system to 50 additional stores in the Northeast and mid-Atlantic, extending the handheld self-service and media delivery solution to a total of 145 Stop & Shop and Giant Food stores.

Based on Modiv Media’s Modiv Shopper system, Stop & Shop’s Scan It! enables shoppers to scan and bag their items while they shop and delivers relevant coupons and promotions based on individual shopping histories.


JANUARY 2009

Developing a Task Force Can Improve Collaboration

True collaboration among trading partners has long been the Holy Grail of loyalty marketing.
To get to that point, says one marketing consultant, try forming a loyalty task force. Each partner’s team would have a dedicated leader as well as common benchmarks that must
be met.

“A multi-cross functional task force, comprised of representatives from the retailer and one or more manufacturers – typically non-competing – is the starting point,” said Donna Zambo, Vice President of Analytics for Consumer Comprehension, consultancy based in New Brunswick, N.J. “The task force will also enable internal collaboration among your own teams and will ensure your marketing and category managers are aligned.  It is also beneficial to include a third-party syndicated partner such as Nielsen or IRI and each respective partner may wish to include an agency member.” 
 
Zambo stressed that the functional areas represented should include customer marketing, research, merchandising/category management, and store operations/retail service. It is critical, she said, that a comparable number of representatives from each partner, as well as the total number of team members, should be kept moderately low. She believes that a
“small and nimble” approach typically works best when collaboration between partners is getting started.  

Leadership, she stressed, is of the utmost importance.

“A high-level management sponsor from each partner is necessary and will keep all members motivated. Co-project leaders – most critical assignments – should be assigned from each partner with the responsibility of keeping the task force on track and moving forward,” she said.

What is the state of collaboration today? Zambo believes there is much work to be done.

“In most instances, collaboration is limited and inconsistent, with each party focused on their own goals and initiatives,” she said. “Occasionally, each trading partner will ‘present’ their respective goals to one another, but collaboration often ends after the first introduction meeting – and neither is prepared to take the next step.”

In speaking about what expertise each trading partner should ideally bring to the table, Consumer Comprehension’s experience cites manufacturers as having the responsibility of having an inner-knowledge of specific brands and how consumers interact with them. Consumer insights related to their products – ranging from top-level general insights, to deep attitudinal and behavioral consumer insights – is also of high value, Zambo said.  

“The retail partner,” she continued, “should bring the expertise of their respective stores, and most importantly, the expertise of their customer as opposed to the typical customer. “Customer-specific insights, ranging from general demographics to deep purchase behavior data by customer segment, are also key.”

The greatest benefit of collaboration is that both parties can gain a deeper knowledge of the customer.  She believes that the collective thinking that results from such an effort leads to the discovery of common goals. 

The positives achieved by both sides cannot be understated.

“The benefits from sharing or integration of insights can be
extremely powerful,” Zambo said.  “A fuller comprehensive exploration of your brand, integrated with respective retailer-specific insights, will lead to better decisions focused on the customer – a definite competitive advantage.”

Certainly there are many obstacles that remain, and Zambo specifically warns against
internal disconnects. Whether on the manufacturer or retailer side, she believes that the misalignment of the brand manager and sales representative; or the marketing executive  and the category manager – or any combination of the four – can lead to a rapid breakdown of collaborative goals. 

But in pinning down perhaps the most difficult roadblock to collaborative success, she cited “time constraints on both sides” as the great barrier that must be overcome. 

“It is important for meetings and tasks assigned, to not be over-burdensome or overwhelming and goals set are realistic given most participants schedules,” she said. “Smaller milestones are important to ensure all stay motivated. It may be beneficial to seek third-party assistance to help facilitate meetings, agendas and assignments.”

Keeping in line with the “smaller is better” approach, the consultant points out that the larger, national partners for collaboration may not necessarily be the best approach.
 
“It may be tempting to achieve a big win with a large partner, but smaller-sized partnerships may prove to be more agile and therefore more effective,” she said. “Smaller size doesn’t necessary mean smaller levels of expertise.” 

Looking into the future, she sees regional chains as paving the way for collaboration simply for the fact that there is less red tape involved in the process.

“With smaller, regional players, you don’t need 20 approvals to act,” she said. “I would recommend manufacturers to embrace that idea – that collaborative learning could be much more beneficial and will come much quicker with a smaller, regional partnership.”

And let’s not forget the customer.

“It is through collaboration that you can understand what the consumer’s needs are with respect to the brand and what the customer-specific needs are a retail level,” said the consultant. “This will ensure that the right product is on the shelf, with the
right offer and the right message, all which is relevant to that particular consumer.”

In summing up collaboration, Zambo used the analogy of a game of darts to get her point across. She said that having only small insights into your customer base will only lead to retailers and manufacturers “throwing darts at the wall.”

The retailer has only so many insights; ditto for the manufacturer. But the more you put the two together, said the consultant, the more you’ll uncover what the customer really wants.

“Collaboration gets you closer to the bull’s eye.” 


Market Watch
Popular CPG Websites Help To Build Brand Loyalty

By Lynne Cooke

Online customer satisfaction plays a critical role for CPG companies using their website to engender loyalty and encourage purchase behavior online or offline, according to  ForeSee Results, a company that measures online consumer satisfaction. Using its CPG benchmark system, the ForeSee tabulated the satisfaction scores for online browsers on more than 25 websites for major brands like ConAgra, Kellogg’s and Snapple, among others.

“The high performance of the CPG industry in our benchmark is an indication that they’ve made serious progress getting and engaging customers online,” said Larry Freed, president and CEO of ForeSee Results. “However, it’s also a sign of how high customer expectations of these websites will become, and it will be crucial for CPG websites to understand how they perform relative to close competitors as well as which specific aspects of their website can be improved for the greatest return on investment during a time when resources may be tighter.

According to the researcher, when compared to less satisfied visitors, highly satisfied visitors to a CPG website are: 81% more likely to return; 109% more likely to recommend it; 59% more likely to recommend the product; 73% more likely to purchase online and 41% more likely to purchase offline. The aggregate customer satisfaction benchmark score for CPG websites in October of 2008 was 76 on ForeSee Results’ 100-point scale, well above the ForeSee Results cross-industry aggregate satisfaction score (71).

“Some CPG companies still struggle with proving that their websites contribute tangibly to company-wide objectives, especially when there are little or no sales associated with the online channel,” added Freed. “When you look at the proven link between satisfaction and both purchase and brand loyalty, it’s clear that the web plays a critical and quantifiable role in the overall success of an organization.”

Catalina’s New Media Network
The Pointer Media Network, launched recently by Catalina Marketing, is a large and sophisticated addressable media network. The platform enables advertisers, media buyers, brand managers and marketers to leverage the network’s sophisticated database of 250 million weekly shopping transactions, which accounts for 80% of American households. 

According to St. Petersburg, Fla.-based Catalina, the network speaks directly to consumers based on knowledge of their individual preferences, purchasing habits and behaviors – knowledge that has been largely out of reach until now. With an infrastructure of more
than 23,000 retail outlets and an average 80% readership rate among target audiences,
Catalina maintains that the network gives clients unmatched consumer insight, precision and media reach.

Cellfire Aligns with Kroger
Cellfire, the only nationwide mobile coupon and discount offer service, is making grocery coupons from a half-dozen leading CPG companies available through Kroger, the nation’s largest traditional grocer. The new capability is presently available to Kroger consumers in Georgia, South Carolina, Eastern Tennessee and Alabama, and includes savings on dozens of brands from Clorox, ConAgra, Del Monte, General Mills, Kimberly-Clark and Unilever.

To use this service, customers register an account with Cellfire and link it to their Kroger Plus loyalty card. Consumers view coupons within a Cellfire interface on their phone, and the coupons they select to use are automatically loaded to their loyalty card. Discounts are applied at the point of sale. Once the coupon is used or it expires, it is automatically deleted from the consumer’s phone and loyalty card.

www.excentus.com
LOYALTY MARKETING

Members of Loyalty Programs Are Best Brand Champions

New Research Tool Determines Brand Loyalty of Consumers

LEAD Marketing Conference Will Debut in October

Fuel Promotions Roll with Some Twists and Turns

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