Top 10 Coolest Trends in Loyalty Programs

Top Trends in Loyalty

Last week was Badgeville’s Engage event in NYC and I had the chance to hear Mark Goldstein, CEO and founder of LoyaltyLab, talk about his top 10 trends in loyalty. Gamification is reinventing the loyalty space and it is critical to be aware of these trends as gamification continues to grow as an industry. As one of the best talks of the night, I made sure to get those ten trends from Mark and have placed them on GCo for your viewing pleasure:

Loyalty programs are changing and the pace of change is faster than ever.  Here are my top 10 cool things you need to think about in 2013 in putting together a loyalty program:

#10 Coolest Thing Going on in Loyalty
Big is good…bigger is better
If you are going to launch a loyalty program, go for the gusto or don’t go, firms putting less than 1% of their marketing budget and who don’t have 100% C-level buy-in will not succeed.

Example: www.playatmcd.com

#9 Coolest Thing Going on in Loyalty
You Aren’t Alone…
There are now 8000 and growing national loyalty programs and most of your customers are members of at least 50, where it used to be maybe 5 (their grocer, a PLCC-private label credit card (like The Gap), and maybe an airline or cash-back credit card).  Now you join a loyalty program or two everything you go to a local farmer’s market and pay with Square.

#8 Coolest Thing Going on in Loyalty…
Awesomeness is Expected
Punchtab.com (and to an extent Belly) allows any merchant to look and perform like a mature million dollar program.
The storytelling, loyalty rules (tiers, thresholds, award types) and functionality are increasingly available out of the box, very inexpensively and totally well understood.  Years ago, I ran around trying to get anyone to listen to my ‘What is loyalty’ presentation, those days are long gone.

Examples: www.starwoodhotels.com/preferredguest and www.punchtab.com

#7 Coolest Thing Going on in Loyalty
APIs and Easy Connections
There are no loyalty islands, not deeply integrating and connecting thru Facebook,Twitter, Paypal, Janrain, Shopkick and now perhaps most importantly Apple Passbook is loyalty suicide!
It’s not just about you and your program, it’s as much about what you are connected to.

#6 Coolest Thing Going on in Loyalty
What’s your signature insight?
What is your unique point-of-view, your point of differentiation, your north star?  What do you do/bring to market than truly different?  Ands who are you targeting, just focus on the unique attribute and build from there.  Are you members bald, Yankee Fans, super cheap???  Whatever it is—make your program standout for them first and foremost.  Forget offering rewards like Mini Coopers and trips to Italy, nobody remembers.

Example: Nine West’s 9 Loves

#5 Coolest Things Going on in Loyalty
Gamification
Game mechanics is today’s rocket fuel of loyalty programs.  It’s the new juice or icing on the cake that will generate the engagement you need.  You want LTVs and more revs?, think gamification.  It’s used to be social, but social is yesterday’s story and is now an assumed ingredient.

Examples:  Badgeville.com client implementations by Taskrabbit, Prosperloans and Active Trainer.

#4 Coolest Thing Going on in Loyalty
Payments are the new PLCC (private label credit card)
What Alliance Data was to the industry, Square and other will be.
The days of the PLCC are over.  Millennial saw their parents lose their homes because of their credit card debt and having too many credit cards, today’s is all about ACH, debit and avoiding credit card games, don’t be seduced to tying your program to a PLCC unless you target customer is in their late 50s.

Examples:  Starbucks, Square, LevelUp, Google Wallet and Apple Passbook

#3 Coolest Thing Going on in Loyalty
POS is dead, long live the new ‘invisible payments’
POS is short for ‘point-of-sale’ or the cash registers you see at retail.  Good bye IBM and Aloha POS and hello cloud based computing.  It used to be that 90% of your time designing a loyalty program was around the closed POS in store and 10% went into the program after you figured out how to make it work with POS.  Now the numbers are the opposite, you put 90% into designing and building and iterating the loyalty program that runs across all your consumer touch points.

#2 Coolest Thing Going on in Loyalty
Be Ready to Reward ASAP
The old adage of ‘first build your member base and then monetize and reward’…forgettaaboutit!  In a day where celebrities can acquire a million twitter followers in a day you need to be ready to reward and monetize out of the gate, there is not waiting around, engage, shoot and shoot again-twice!.  In today’s world, the lifespan of a loyalty program member is maybe 20% of what it was 5 years ago.  With this reduced half-life, you have less time to fully execute and need to drink the Red Bull 24×7 out the gate.

I spent $50M launching a free internet service provider (ISP) in 2000 (The Blueight ISP) @ Kmart, all just to get the email addresses so I could communicate across channels!   Thankfully, those days are thankfully gone.

# 1 Coolest Thing Going on in Loyalty
Traffic is Everywhere
And don’t think you need to just go to Facebook or Twitter to find it.  Find the consumer Internet play that most closely aligns to your business.  The band Green Day found bake-your-own music powerhouse Soundcloud.  Soundcloud’s million of registered uniques powered Green Days’ NumeroUnoFan program to incredible heights.  Green Day has hundreds of thousands of loyalty fans thanks to SoundCloud

BONUS: Coolest Thing Going on in Loyalty
Real-time is the real deal.  There is an event-based transformation going on in loyalty.  Members expect to be rewarded in real-time, anytime anywhere.  It’s called sense and respond not campaign marketing and it means you need to reward and provide real-time surprise, real-time magic. Harrah’s does it with their Total Rewards program—in Las Vegas and around the world—you get points and awards in literally anything you might do once you arrive at one of their properties and even before you get there!.  Vivek Ranadive’s book The Power of Now details how companies are changing it up and providing incentives to engage all the time, read this book!

Executing in loyalty today means you need to conduct an orchestra, but it doesn’t mean you need to buy a concert hall, pay 75 full-time musicians, and negotiate with a union.  It’s more like E.D.M (electronic dance music) where you need to be Deadmaus5, have mouse ears, and have a MacBook in hand.  Yes, you need to get CRM, coupons, samples, third party site integration, gamification, email, POS, and mobile all working really well together but the Internet makes it both harder and easier to execute. You simply need to collaborate with all the amazing tools, sites and connected possibilities you have and be ready on day 1 to wholly execute on an incredible scale.  It’s a great day to be alive in loyaltyland…and it’s a new world.

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Mark Goldstein (@markgee) founded and was CEO of LoyaltyLab now a part of Tibco Software, the technology provider behind many of the nation’s biggest loyalty programs.  He has had his hand in launching over 100 loyalty national programs and got involved in the loyalty world starting in 1999 when he Co-Founded and was CEO of Bluelight.com, a business formed by Kmart and investors to find multi-channel customers nationwide.