Thought Leadership 2


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Thought Leadership 2


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Marketing Is Dead, Loyalty Isn’t


Marketing Is Dead, Loyalty Isn’t


It has been said that marketing is dead.

Let us be perfectly clear: that is patently false. That very statement is, after all, just another form of marketing, a form of manipulation, the kind of provocative, over-the-top claim designed specifically to attract clicks and drive SEO traffic (which, by the way, has also been declared dead). It is certainly true that traditional marketing techniques — including advertising, public relations, branding and corporate communications — are experiencing a steep decline in efficacy. But that’s hardly news. People have been declaring print media dead for decades, with syndicated television and radio soon to follow. But even these mediums for advertising compose but a small part of what marketing entails. The bombastic claim that “marketing is dead” is, in itself, pure marketing.

It is a ploy.

In the world of marketing, ploys work – to a limited extent. Unfortunately, when it comes to consumers of the modern era, that limit was reached long ago. People simply aren’t paying attention anymore to ploys. Audiences have developed the ability to see through the doublespeak traditionally employed to garner their limited attention. They have evolved a resistance to traditional means of disruptive marketing.

Consider the current paradigm prevalent in the marketing sphere: companies expend enormous financial resources on advertising campaigns in an effort to inform consumer behavior. But why should consumers listen? In a low-trust world, traditional means of advertising simply do not, cannot stick. They lack credibility, and without credibility, they lack the power to inform consumer choice.

The problem here is trust.

The solution is people.

Trust In A Low-Trust World, Loyalty In A Disloyal World

Atul Gawande’s recent New Yorker article on the spread of ideas, Slow Ideas, explores the social mechanics behind what helps great ideas spread. One of his key findings suggests that simply creating a strong idea, a superior product, a slick presentation does little to speed actual adoption. Rather, the key facilitator of adoption is quite simply: other people. “Diffusion is essentially a social process through which people talking to people spread an innovation,” wrote the great scholar Everett Rogers.

Of course, mass media can introduce people to new ideas, new products, and new ways of living. But, as Rogers posited, people follow the lead of other people they know and trust when they make decisions. Gawande goes on to write, “Every change requires effort, and the decision to make that effort is a social process.” In other words, like any healthy social relationship, the relationship between a brand and a consumer must start from a datum of mutual trust.

People could care less about what marketers have to say. After all, marketers have interests that don’t necessarily align with theirs. Marketers can’t be trusted. But if someone they do trust, someone they know and care about recommends a product, they would be inclined to check it out. Furthermore, by making a recommendation, the recommender puts his reputations on the line. A Nielsen Global Online Consumer Survey found that 90% of consumers trusted the recommendation of friends.

As an individual within the consumer’s personal sphere of influence, a friend is credible in a way that no slick, well-executed marketing campaign could ever hope to be from the outside. They are the coveted and elusive brand advocates, the holy grails of brand loyalty sought by marketers (and the companies that pay them). Customers are good. Repeat customers are better. But what you really want are customers who not only come back time and time again for more, but encourage others to do the same. These are the customers who have bought in literally and figuratively, and they willingly share a brand with their friends and family. And, they do it for free.

Unfortunately, today’s consumers, particularly young consumers, are notoriously disloyal and prone to jumping ship in search of greener pastures and better value. Forum Corporation reports that up to 40 percent of the customers in its study who claimed to be satisfied switched suppliers without hesitation (Stum, D.,and Thirty, A. “Building Customer Loyalty.” Training And Development Journal, Apr. 1991, pg. 34.). Clearly there is a massive deficit in customer loyalty currently affecting the marketplace.

Building Fandom, Building Trust

In such a low-trust environment, how might a business go about establishing not only a customer base, but a base of repeat customers and, more importantly, brand advocates?

First, by engaging and empowering the customer base, and helping them navigate the Consumer Decision Journey along the way. If the key to successful dissemination of an idea is peer to peer communication, then the heart of marketing success is relational. More specifically, the relationship between brand and customer must be more than just transactional. Consumers don’t want to be just another target statistic, just another market segment. Heck, no one wants to be just another number in line, another cog in the grinding machinery of global capitalism. Countering this all too common narrative of grinding capitalism with one that consumers can actually believe in and get behind, is absolutely critical for success in any venture.

Take a look at the world’s most admired companies in recent times. Chances are, the old-school blue chip stock favorites, like GE or Ford, aren’t topping that list. Don’t get me wrong, GE and Ford are, and will remain, ridiculously profitable. But the real success stories are the ones that have emerged from the internet revolution, the true scions of our age, and more importantly, often have a fanatical fan following. It is no accident that tech companies are more trusted in general than any other market sector, and that the three businesses that top the list include Apple, Google, and Amazon are tech firms.

Companies such as Apple have built stunning success on delivering not just an excellent product, but also weaving a compelling narrative through unique design as well as through front line pioneering. Apple’s “geniuses” employed in their specially-designed stores across the world are no more than loyal, Apple advocates who are given the chance give sincere, trustworthy advice to other customers. After all, Apple isn’t just another tech company, it is the pursuit of product perfection.

Likewise, Amazon isn’t just “a website that sells stuff at a good price”. Rather, Amazon’s mission statement is simply to be Earth’s most customer centric company. More importantly, they follow through with hassle-free returns and an almost neurotic attention to customer trust-building measures such as personalized buying suggestions.

Google, approaches trust-building by first building staff loyalty. The tech giant, often named the best place in America to work, is legendary for the benefits they lavish on their employees. After all, happy, empowered employees are very much loyal advocates in and of themselves.

Other firms that topped the list include Southwest, known for their renowned friendliness, happy employees, and a mission statement that has nothing to do with airplanes, but everything to do with freedom.

These companies don’t simply enact customer loyalty programs and then sit and wait. Rather, these companies constantly innovate salient ways of keeping the customer engaged in every conceivable way, all in the pursuit of credibility. As their balance sheets can attest, that pursuit has paid off in spades.

Welcome to the new age. The old ways of marketing have died, and good riddance. With the passing of gimmicky marketing ploys, companies can get back to creating real value and giving customers real social capital. In fact, marketing is not really dead – it has been made more alive and potent than ever. With the rise of the internet, businesses both large and small are now being held accountable for the marketing content they produce and the messages contained there within. With so many customers ready to tune out or switch to the competition at the click of a button, that message had better be worth something. Loyalty, after all, must be earned.

Separating Friends From Fakes


Separating Friends From Fakes


Building friendships and relationships, whether between individuals or between a customer base and a brand, requires trust. Building a relationship through effective loyalty marketing is key in identifying and really getting to know your best customers

There Are Facebook Friends, and Then There Are Real Friends

Expansive social media platforms, such as Facebook, can often feel completely shallow and utterly meaningless. Social media metrics such as your friend count, wall-to-wall interactions, and event invitations do very little to actually tell you anything about other users, or even yourself, beyond a rudimentary kind of public scorekeeping.

[sws_blockquote_endquote align=”left” cite=”Michael LeBoeuf” quotestyle=”style01″]It’s not enough to reward your customers with good service. You have to make them aware of the good deal that they’re getting for doing business with you — and keep reminding them of that in many subtle, different ways. [/sws_blockquote_endquote] After all, what really is the difference between having 10 friends, 100 friends, or even thousands online that you never talk to? The number of social interactions happening through social media certainly doesn’t indicate the quality of a relationship or gauge the depth of social engagement.

Don’t get me wrong, the invention of social media platforms has revolutionized the ways we communicate, interact, connect, and eventually spread ideas and culture across time and space. Yet, the act of getting to know someone on a personal level, of becoming friends so to speak, hasn’t changed for millennia. To really get to know people, it takes quite a bit more effort, time investment, as well as the occasional dose of risk – things social media platforms in their current incarnations have allowed and encouraged users to opt out of entirely.

Making friends and close connections requires authentic care and attention, and more importantly, trust. Cultivating customers who are not only repeat visitors, but also fervent advocates of you and your business, requires the same kind of love and care. In the customer loyalty marketing space punch cards just don’t cut it anymore. vPromos CEO, Jeff Mankoff, posits that the biggest problem with consumer loyalty programs today… [may simply be the fact] that consumers don’t want to carry around another punch card. Generic loyalty tactics don’t build brands. In fact, punch cards, and other bland rewards programs, are so ubiquitous that customers actually feel burdened, even punished, by the sheer number. The whole point of implementing a rewards program is to differentiate your brand, and reward your customers – foisting another generic punch card ploy onto patrons may not be the best way to do so.

Starbucks: A Case Study of the Gold Card

The Starbucks corporation, which first opened its doors in 1971 as a small cafe in Seattle, is now a 13 billion dollar operation that is regularly ranked one of the most admired companies in the United States. Its success in commoditizing traditional cafe culture for the mass market made it a global brand, and has been widely copied and adapted by food service competitors. Starbucks may have popularized standardized cafe culture in the United States, but intense brand loyalty is what keeps the company well ahead of the pack.

One way Starbucks builds brand loyalty is through rewards initiatives which, on the face, operate with similar mechanics as other popular reward programs. The more you buy, the more you are rewarded. However, beyond this simplistic mechanism for increasing sales lies a deeper intent to build customer relationships.

For example, the “Gold Level”, the highest level of the company’s multi-tiered reward scheme (My Starbucks Rewards program), has an added layer of social prestige and targeted personalization built in. Attainment of gold status comes with a slick and shiny gold card with the individual’s name and the date of their ascendance imprinted on the card. And it works. It works because as a rewards program, it does more than reward loyal customers with more physical goods or financial savings, it rewards with social currency and prestige.

It is added value that isn’t tied to finances. For example, while a friend will lend you money from time to time, and you may do the same for them, your friendship isn’t based on money. Rather, you give and take advice, feedback, favors, social cues, relevancy, and occasionally, criticism. In the same way, Starbucks isn’t giving you an occasional free coffee because you’ve earned it; they are giving you a free coffee, as well as personalized service and other fixings, because they consider you a preferred customer, a friend of the company.

Michael LeBoeuf, author of How to Win Customers & Keep Them for Life, argues that, “It’s not enough to reward your customers with good service. You have to make them aware of the good deal that they’re getting for doing business with you — and keep reminding them of that in many subtle, different ways.”

What do friends do? They celebrate your birthday. What does Starbucks do? The coffee chain will give My Rewards members a free drink on their birthday, reminding you of how awesome Starbucks is. In fact, the manner in which Starbucks implemented their rewards program earned it the 5th spot on The Street’s list of best rewards programs.

Of course, even Starbucks makes mistakes from time to time. Every business has to deal with customers whose consumption habits have become less than loyal. Unfortunately, Starbucks has chosen to do so by handing out demotions, effectively punishing former star customers who do not made an adequate number of purchases in a given year. Most people don’t much like being punished, particularly for something as trivial as buying a certain number of cups of coffee in a given timeframe.

There are other, better ways to encourage formerly prolific customers to return to the fold without resorting to sticks. To start, preferred customers could be warned of an impending status change, then it could also be made easy for them to get back on the train once their status has been revoked. The key word here is “easy”.

By its very definition, rewards programs are often perceived by customers as a series of hoops that must be traversed to attain a certain privileged status or unique boon. Having already jumped through those requisite hoops, most people don’t want to do it again. In fact, many individuals will readily switch to an alternative if only to avoid redoing anything. Remember, 20 percent of a business’s customer base (your best customers) will often contribute 80 percent or more of its income. Don’t punish that 20 percent.

Building Loyalty By Building Trust

There are many strategies for establishing relationships with new customers and building trust with existing ones, including outstanding customer service, superior products and experiences, and value through customer loyalty initiatives. The former two are no-brainers that all good businesses single-mindedly pursue to the highest degree. But the third, customer loyalty and retention, is what separates a good business from truly successful industry leaders like Apple, Toyota, or Starbucks.

In a sense, customer loyalty programs are a trust-building exercise. Unlike the use of coupons and other forms of immediate price promotion, reward programs are all about delayed gratification and working towards a shared goal. The consumer trusts that his patronage now will be rewarded later, almost as a form of investment. In return, the company keeps their end of the bargain by giving added value, in both hard and social currency, once the agreed upon goal is met. In other words, building trust in the context of a brand relationship, much like in a peer to peer relationship, is a process that occurs over time.

While many business owners and other niche firms don’t compare to these mighty corporations in terms of scale, reach, or cultural leverage, there are very few lessons learned that cannot be applied to businesses of all shapes and sizes.

How do you feel about the effectiveness of punch cards? What are some creative ways your business cultivates a sense of loyalty and emotional attachment to your place of business or product?

Don’t Tax Your Customers


Don’t Tax Your Customers


Want to win repeat customers that will come back to your establishment time and time again? Rewards marketing can be a good strategy for providing both value-added benefits and as a means of differentiating from the competition. However, many businesses, in their rush to build a rewards program themselves often forget the cardinal rule of rewards marketing:

Make it easy.

Nothing kills a rewards program faster than inconvenience.

Don’t Impose a Brain Tax on Your Customers

In the United States, no one, other than tax preparers and accountants likes the process of paying taxes. The forms are just too hard. In fact, according to a compilation of Gallop polling on this matter, it would be safe to say that a majority of Americans hate the process of paying taxes – regardless of how high, or relatively low they may be. It is the process. Paying taxes should be easy. It is easy in Europe where they have a value added tax, a National sales tax if you will. That is an easy tax, and not many people think about it when they pay, or for that matter complain about it. If I were in charge, I would set up an easy, value added tax, to take the pain out of taxes.

When it comes to businesses, and their interaction with customers, many establishments unknowingly levy another kind of tax – a “brain tax” – measured in time wasted and inconvenience, on their clientele. Worse, many establishments do so without even bothering to notify the populace.

In today’s marketplace, businesses are vying for a share of the public’s attention, and obviously, a piece of their wallet too. Customer loyalty programs are now a must for businesses looking to win new customers, reward loyal ones, and convert fickle buyers into repeat customers. The average consumer is enrolled in an astonishing 18 separate programs, many of which are structured in exactly the same manner, making differentiation a key frustration.

However, what enrollment numbers can’t quantify is the actual level of engagement in the ocean of loyalty programs out there. A study released by Monash University found that the average male actively participated in a grand total of two programs. Females, who are often more heavily targeted for participation, averaged four. That means that out of the many hundreds of rewards programs consumers are exposed to, they only take action on 18, with 14 to 16 of that elite selection languishing in cognitive oblivion. The numbers don’t look good.

The question for many businesses out there remains: How do we improve on these dismal statistics?

Playing the Rewards Game to Win

The key to a rewards program that works is quite simple: simplicity. More specifically, ease of use appears to be the key differentiator. American Banker Magazine reports that the primary driver of customer preference for certain rewards programs was, in fact, determined by how easy those programs were to use.

However, a stunning 81 percent of loyalty members polled don’t even know the program benefits of the programs in which they are enrolled or how and when they will receive rewards. As a result, as much as one third of all rewards dollars and miles, amounting to some 16 billion dollars annually, goes unredeemed, thanks to hurdles and opacity built into many rewards schemes.

This leads to a potentially damaging conclusion in the mind of consumers, “They don’t actually want to reward me.” Or worse, “This is just another marketing scheme.”

Consumer trust in businesses has been on the rocks for decades, and correlates with a decline in general loyalty in the marketplace. As it turns out, consumers don’t like taxes much either, particularly if what they are expending is time and effort. Hurdles, such as long application processes or convoluted rewards hierarchies, effectively function as a brain tax.

Regardless, the fact remains: Businesses looking to implement a successful loyalty program need to make their approach easy to understand, and even easier to use.

4 Ways to Keep Your Rewards Program Nice and Easy

Keep the Customer Informed

85 percent of loyalty members haven’t heard a single word from the establishment or service provider since the day they signed up. That’s an enormous, wasted opportunity. Consumers take action to sign up for a program exactly because they either like the service or product, or see the potential for savings and other forms of value added in the rewards plan. This is a target audience that has taken the first step towards full engagement and given the right attention and incentives, could be ready to take their relationship with the company, or brand, even further.

Don’t Introduce New Rules Willynilly

A study done by researchers at the University of Michigan showed that learning new rules is both mentally taxing and potentially costly. The truth is, people today only have so much time and brainpower to devote to any one subject. That means that if the rules of a loyalty program change enough, many consumers will simply cease participating in it.

Help Your Customers On Their Way

When it comes to rewards points, punch cards, and other “buy X number of times, get one free” schemes, nothing is more discouraging for a customer than feeling like the reward itself is impossible, or difficult to obtain. On the flip side, few things can encourage a repeat visit as strongly as a rewards threshold that is on the verge of being met.

Therefore, rather than providing one goal that may require many visits, it is far better to intersperse many smaller benefits along the way to a larger reward. Has the customer been coming less often recently? Give them some points to help them along. Is it their birthday? Go ahead and give them a freebie this time. The point is, don’t make reaching their rewards goal a hassle. Make it easy. By culturing a reward relationship, as opposed to focusing on a singular goal, it encourages constant user engagement.

Provide Some Actual Value

Of course any rewards goal is no good if it isn’t worth the effort. Only 36 percent of consumers received a reward or promotion that actually motivated them to make a second visit. Only 17 percent of U.S. respondents say that loyalty programs are “very influential” in their purchasing decisions. If it’s not worth their time, consumers won’t bother.

A customer’s time is important – and irreplaceable. Make it worth their while, and more importantly, make it quick. Customer attrition numbers cast a rather bleak picture on the efficacy of many loyalty programs.

Considering the inbuilt hurdles, worthless or hard to get rewards, and other forms of cognitive taxes imposed on consumers by many ill-conceived loyalty schemes, it’s small wonder the public is often wary of these programs. As it turns out, proposing a tax on their time and energy is not a winning proposition. Yet many companies still do it, and wonder why their often times expensive loyalty schemes aren’t paying any dividends.

The inconvenient truth is, it’s because they’re program just isn’t convenient enough. In an age of increasing consumer choice, and lessening attention spans as a result, if your loyalty pitch can’t be understood and put to use immediately, no one will care.

How have loyalty programs worked out for you? To learn more about easy loyalty marketing, please visit vPromos at http://www.vpromos.com

Act Like You Know Your Loyal Customers


Act Like You Know Your Loyal Customers


One of my favorite books is How To Win Friends and Influence People. Lesson number one is know the name of the person you are talking with, and use it. People love to hear their names. When I shop at Nordstroms, the sales person recognizes my face and he acts like he knows me, which he does. That makes me feel good. When I hand him my credit card he calls me by my first name. That makes me feel good. Sometimes they ask me if they can send the receipt to my email. And then they ask me for my email address. That does not make me feel good. I want the stores I shop at to recognize me, and treat me like they know me. That includes my knowing my email. It should be easy and automatic.

What I don’t like is going to a retailer, you know which ones, and when I am checking out they ask me to join the rewards program, every time, even though I am already a member. I won’t carry another card, so the store links my reward info with my phone number. Then the annoyance really starts. The cashier asks for my phone number (I have three) that is linked to the reward program. I never know which one to give him, or if it is under my wife’s phone number. And when we finally hit on a match, nothing happens. There is nothing reflecting points earned printed on the receipt. There is no email or text thank you. No real acknowledgment that the store knows me or appreciates my “loyal” business. And I never know where I am on my reward path, or how to even redeem my reward.

When creating a loyalty program, we want to make the member feel special. That means not forcing our valued customer to work hard to enroll, earn points, and redeem rewards. It must be easy, and give the impression that the store knows who you are, and is appreciative that you are shopping there. This means act like you know your customer and don’t ask him to join the program if he is already a member. And if he is a member, then send a “thank you” email or text, without your customer having to provide his mobile or email address every time. It should be easy and automatic, as if the store actually knows who you are and values you as a customer, so as not to annoy you with questions it should not have to ask.

Technology exists today to act like you know your loyal customers. I know because we are doing it today at vPromos.


Today vPromos technology. . .

  1. Links customers credit cards with the merchant’s reward program at the POS;
  2. Recognizes reward members simply when they pay with an enrolled credit or debit card;
  3. Thanks the customer with an email or text triggered by the purchase transaction and informs the member how many points he just earned, and
  4. Lets the Loyal Member redeem rewards simply by paying with the same credit card he always use.

In effect, the key is to make the customer’s existing credit card his reward card. [/sws_grey_box]

Now that makes me feel good.


Why Loyalty Matters: Measuring the Cost of Losing a Customer


Why Loyalty Matters: Measuring the Cost of Losing a Customer


Hearing loyalty marketing experts tout the value of customer loyalty can often feel like listening to a broken record. We get that customer loyalty is important. We get that high levels of loyalty directly drive company profits, and ultimately, long-term success. We understand that developing long-term relationships with a customer base, much like a constituency, is so very critical to success.

But behind all the heady rhetoric lies a rock solid core question that many business owners don’t really get: How much does it cost to lose a long-term client? After all, you can’t manage what you can’t measure.

Calculating the Ripple Effect

Losing a long-term client, or when a patron goes “inactive”, represents a significant loss – more significant than many proprietor’s may assume. Sure, lost customers and their financial contribution to a firm’s bottom line could, in theory, be made up for with new business and new customers.

But the cost of acquiring new customers, through marketing campaigns, promotions, and other new customer acquisition strategies, requires a significant outlay of money that will eat into what profit can be earned. Long-term patrons don’t require the kind of expensive upkeep required to acquire, retain, and ultimately convert newcomers into regulars.

Regulars are low maintenance, yet according to the “Pareto principle”, otherwise known as the 80/20 rule, they often contribute the most to a company’s total income. Furthermore, when a long-term client takes his or her business elsewhere, the dumped company forfeits more than just a single purchase, they also lose out on that client’s future purchases as well, leading to a ripple effect of loss over time.

In Thriving on Chaos, author Tom Peters suggests calculating the 10-year value of a firm’s clientele. By using this simple device to help quantify a customer’s future buying potential, business owners can begin to understand and appreciate the value of a customer (and why it would be beneficial to keep them coming back). So how does this work for a sub shop restaurant with a customer that dines once a week and spends $10 each visit?

          Annual Customer Purchases * 10 Years = Rough Lifetime Value (LVT)
          For example: $520 avg yearly spend * 10 years = $5,200 rough LVT

The problem is, most small shop owners would view this customer as a one-off $10 transaction, when in actuality this particular customer is worth $5,200. Interestingly, industries with repeat business like restaurants rarely track lifetime value, which is probably due to the fact they don’t have the data to track frequency and spend and identify high value customers, which is due to the fact that they do not have a loyalty program. The key take away here is that customers have a lifetime value (LTV), composed of many transactions that when viewed in sum, represent a much more significant amount of money than a simple, one-time purchase.

The customer and his or her future buying potential represents a huge appreciating asset for businesses. For example, a sub shop may do 2,000 transactions a month. Per the Pareto Rule, 20% or 400 on average dine there once a week, for a total of 1,600 transactions that month. Some of them dine more and some less, but you get the idea.

For many market sectors, losses resulting from poor customer loyalty don’t simply stop at lost direct sales. A disloyal customer may dissuade their friends and family from making purchases, greatly compounding the accrued losses a firm may suffer. A prospect worth $5,200 dollars over a decade may cost a business many times that depending on what kind of word of mouth business they bring (or turn away).

A dissatisfied customer will tell 8 to 10 others about their experience. 1 in 5 tell another twenty. Most American automakers are still wrestling with the ill effects of a bad PR ripple that has persisted for decades. As you can see, lost customers can, in some circumstances, start a chain-reaction of negative PR that can quickly become unmanageable. However, as we pointed out earlier, “you can’t manage what you can’t measure”.

So What’s Killing Loyalty?

A Rockefeller Foundation study found that the most common reasons formerly loyal customers chose to take their business elsewhere were as follows:

  • 14 percent switched to the competition because complaints were not handled.
  • 9 percent left simply because the competition offered a better deal.
  • 9 percent ceased doing business because of geographical relocation.

However, the vast majority of respondents, 68 percent, claimed to have switched for “no special reason at all.”

What that means, suggests author Jill Griffin, is that most customers leave because of benign neglect. More than half the time, customers will not communicate their dissatisfaction; they will simply take their business elsewhere, leaving many businesses both confused and flustered. As it turns out, maintaining a long-term relationship with individual consumers requires constant attention and investment.

Invest in Good Customers

With the Pareto principle mentioned earlier in mind, it is important to note that sometimes it is actually okay to lose a bad customer. Companies should be worried about acquiring fairweather customers that will bale as soon as a promotion ends, or from a bottom line perspective, customers who become more expensive to retain than they are worth.

Most companies simply cannot afford to buy loyalty – at least not everyone’s loyalty. Nor should they. Rather, firms should focus on acquiring and investing in so-called “good customers”.

Good customers typically exhibit higher CLV’s, and higher levels of loyalty, yet require significantly less resources to retain. Unfortunately, many establishments make the mistake of dumping their entire marketing budgets into enticing new customers to make first-time purchases – a rather expensive strategy with questionable returns. Rather, by identifying and then cultivating long-term relationships, as opposed to short-term transactions, with high-CLV patrons, a business stands a much better chance of succeeding.

If you or your business is spending tons of money with little return in order to acquire new customers, you are probably going about it wrong. The goal isn’t to buy loyal customers, it’s to earn them, then keep them with constant investment and engagement.

One way to retain good customers is to reward them for their patronage. However, implementing an effective loyalty rewards system is challenging.

For businesses looking for a seamless way to reward their best customers vPromos can help!

Loyalty Programs Should be Seamless


Loyalty Programs Should be Seamless


Many of us use our spare time to surf the web, as opposed to virtually any other human activity because: A.) We can. And B.) It’s literally one click away.

Good loyalty rewards programs should feel and act the same way.

Smooth Out the Seams

For all intents and purposes, the threads that bind us to the brands that have traditionally dominated the marketplace have come undone. Old school brand loyalty is dead, or so they say. But loyalty itself isn’t. After all, internet companies like Google and Amazon enjoy nearly unchallenged market domination in their respective fields – information search, and online shopping.

Why? Because the services they offer are so incredibly easy, so straightforward, and for time-pressed consumers, so much more preferable than making the effort to patronize a brick-and-mortar establishment. The logic of the internet lends itself to creating a seamless experience devoid of any and all barriers between a consumer and their point of destination (or purchase).

Today, transactions work at the speed of light. Your rewards system should too.

Unfortunately the logic most businesses seem to pursue, when it comes to implementing a loyalty program, is the exact opposite. Keychains, cards, and other forms of wallet filler are a physical burden foisted on most consumers without their permission. Small wonder why both parties hate them. They have become, in effect, barriers.

At some point, most consumers will weigh the effort required to obtain a freebie, and the value of the freebie itself, and probably conclude that you don’t really want to reward them in the first place. At that point, a poorly conceived and implemented loyalty program is likely doing more harm than good, and should be discontinued altogether.

Consumers want ease, not more barriers to hurdle. As it turns out, the best rewards a company can give to its loyal patrons are a seamless experience and respect for customer time. Successful companies such as Amazon nail both those things.

Empower the Engagement

The whole point of instituting a loyalty program is to encourage engagement, and hopefully cultivate sales in the process. One of the best ways to do that is to ensure that the rewards ecosystem itself is completely integrated into daily life – seamlessly. Systems such as vPromo’s electronic loyalty program allows reward members to use their existing credit card, to make both the loyalty transaction and the act of rewarding much, much easier.

With the swipe of a credit card, users can earn points or punches and redeem rewards for the merchant’s reward program. No more cards to lug around. No more coupons that need to be cut or printed out. Therefore, the best loyalty rewards programs are themselves engaging to use, fast, and simple; i.e. seamless.

This kind of straightforward simplicity is the stuff loyalty is made of.

When Building a Loyalty Program: Time is of the Essence


When Building a Loyalty Program: Time is of the Essence


Sometimes it seems as if life just keeps on getting faster. And faster. And faster. In fact, where time was once measured in years, months, and days, today time is now measured in minutes, seconds, and even milliseconds.

To us, what happens between the confines of a measurable second is more or less instantaneous. Whether it be a simple Google search or service in a restaurant, we have come to expect instantaneous, or at least very, very fast results.

It is, after all, against this backdrop of the instantaneous that our expectations are informed. Our expectation of loyalty programs is no different.

Now or Never

If there’s one thing consumers hate more than anything, it’s having to wait. 50 percent of mobile users will abandon an ecommerce site that takes more than 3 seconds to load. 3 in 5 won’t return to it.

In the brick and mortar world, half of all consumers would not return to an establishment that kept them waiting. Amazon could purportedly lose as much as 1.6 billion dollars in a year if its webpages were delayed a second.

Yet for some reason, the vast majority of loyalty programs out there continue to insist that consumers carry around a keyfob, wallet-busting loyalty cards, or other unwanted loyalty paraphernalia. If the difference of a single second can make or break purchases online, chances are the inconvenience of having to lug around a whole host of loyalty accessories will render the offending reward programs mostly ineffectual.

What is the main issue with these conventional schemes? They inconvenience consumers and needlessly waste their time. Want to get a free sandwich? You’re going to have to dig through your wallet or purse for the punchcard. Want to get members-only pricing on select products? You’re going to have to fill out this long and tedious application form.

Cut. To. The. Chase.

When it comes down to it, if a consumer can’t have what they want when they want, most consumers would rather just not have it. Implementing an instantaneous, seamless rewards system is a critical first step towards cultivating long-term buyers in an era of short-term consumer allegiances.

Card-Linked Offers: The Future of Deals


Card-Linked Offers: The Future of Deals


How Facebook, Microsoft, Bank of America, Discover, Mastercard, and other banking and technology heavyweights are getting together to change the way we do discounts.

On October 7th the scions of Silicon Valley and the big bulls on Wall Street got together at this year’s Money2020 Expo to announce The CardLinx Association, a new, cross-industry group aimed at promoting card-linked offers. What’s particularly interesting is the seemingly diverse litany of brand name companies involved in the venture – Facebook, Microsoft, Bank of America, and MasterCard just to name a few – and the coherence of their concerted effort to push what could, quite possibly, do away with coupon clippings and punch cards for good.

Good For Consumers, Great For Businesses

The way we do business is changing. The emergence of online promotions in particular, along with the rise of mobile computing and the proliferation of smartphones, have fundamentally shifted the way consumers interact with, engage with, and make purchases from most vendors. At the same time, traditional means of promoting business are failing.

The ocean of conventional promotional materials (i.e. paper coupons, mail-in rebates, etc.), most of which are tossed in the trash, have become an enormous burden on time-pressed consumers. In other words, the archaic nature of many “offers” programs is physically limiting growth in a rapidly digitizing society. CardLinx referred to these limiting factors as a form of “friction” preventing the easy acquisition and redemption of relevant offers. For the average consumer, time and convenience is the new currency.

Traditionally, the act of driving consumer action, promoting customer loyalty, and collecting personal information for behavioral clues are handled as three separate processes. From a business’s perspective, this often means that the establishment in question would have to implement independent advertising campaigns, loyalty programs, and data farming apparatuses – all expensive, all with their own support requirements, and all completely disconnected from one another.

Card-linked offers promise to do all three with a single simple, integrated system.

Users simply sign up, purchase a digital coupon, which is then linked directly to their debit or credit card, and make a qualified purchase at a participating business. The discount is directly applied to their statement in real-time at the point of sale. No printing coupons. No swiping loyalty credentials. No waiting for the rebate to take effect. No hassles for both sides. Better yet, by parsing personal purchase history, vendors can craft deals relevant to each individual and deliver them directly.

Consumers get the exact deals they want, when they want them. Businesses get a unified architecture for promoting customer loyalty and delivering promotions. That’s a win-win.

Best Next Thing

Location-based, real-time offers were not a part of the retail experience just a few years ago. Yet, as consumers continue to demand, and ultimately acquire, more and more flexibility and agency in the way they approach the buying process, the drive towards this type of marketing innovation will only continue. The truth is, card-linked offers could be the best next disruptive technology to fundamentally change the way we buy and sell.

Businesses with the ability to adapt these market-shaping technologies stand a very good chance of better serving their customers, differentiating themselves from the competition, and gaining a critical key market advantage. LivingSocial certainly seems to think so. The much lauded online purveyor of daily deals, which has taken a beating in recent times, is a key CardLinx founding member and is betting that card-linked offers are indeed the way of the future.

For businesses looking for a way to implement real-time offers to their best customers vPromos can help.

The Power of Card-Linked Offers


The Power of Card-Linked Offers


Can card-linked offers co-exist with daily deals?

It doesn’t seem like too long ago when the Daily Deals typhoon, led by the meteoric rise of Groupon, was sweeping the nation. Google offered ownership of $6 billion, but Mason and the other investors turned that down. On November 5, 2011, Groupon went public, with a market cap around $6 billion. Groupon’s market cap today is still around $6 billion. Not bad. But it sure has not taken off. Why not?

Groupon had no real business model. The problem with Groupon is that it is a one time deal, and is done. Groupon will deliver Groupon customers to a merchant, but not the customer’s email address.

After redeeming the Groupon, the Groupon customer is on to the next Groupon. No customer has been acquired. No customer loyalty has been created.

Daily deals in many cases are not good for merchants, with one caveat. If a daily deal actually enrolls a customer into that merchant’s loyalty program, then it is a good deal for the merchant. But with paper Groupon certificates, that never happened.

First, A Card-Linked Program

Card-Linked Offers can augment a card-linked loyalty program and actually enroll a customer into a card-linked loyalty program. But before this can happen, the merchant first needs a card-linked loyalty program.

A merchant who wants to start a loyalty program must appreciate the Pareto rule, the 80/20 rule. Eighty percent of the merchant’s business comes from existing customers. Therefore a merchant first needs to enroll its own customers. The best way to do that is at the point of sale. At vPromos we are seeing great success with loyalty enrollment of the customer’s credit card at the POS. It is easy.

Augmenting Enrollment with Card-Linked Offers

Once the merchant has a card-linked loyalty program up and running, having enrolled its own customers, augmenting enrollment with card-linked offers makes perfect sense.

Here is how it would work. When a consumer goes online to buy a special offer at Groupon for example, that customer’s ID, email, and credit card number token will be shared with the loyalty company for that merchant. When the consumer is ready to redeem the card-linked offer at that merchant, he simply pays the way he normally does, with the same credit card used to purchase the special offer. The POS prints out the special offer discount right at the POS, followed by an instant email thanking the consumer for redeeming the offer, and, most importantly, welcoming the consumer to the merchant’s loyalty program. Now, every time that customer pays with that credit card, he earns points or punches towards that merchant’s reward program.

Loyalty Program and Ongoing Engagement Will Do The Rest

This is huge for merchants. This means marketing dollars invested online can be used to not only get a customer in the door, but potentially acquire that customer for life. Once the merchant has the email address, it can engage the customer and get him back to the store. The loyalty program and ongoing engagement will do the rest.

But what will the Groupons of the world think of this model? The reason they don’t share the email today is that the merchant has to come back for more. If the customer is acquired by the merchant, the media company, Groupon in this case, may run out of customers to deliver the merchant.

The Future is Happening Now

The offers space is evolving, and it appears that card-linked offers are the way of the future. Except that the future is happening now.

My next blog will talk about Real time card-linked offers vs. Not real time. The difference is huge.

For businesses looking for a way to implement real-time offers to their best customers vPromos can help.

Card-Linked Offers Mean No Hassles


Card-Linked Offers Mean No Hassles


How and why card-linked offers are poised to boost the earning potential of businesses across the nation.

The Daily Deals (Re)Model

It’s no secret. Consumers and merchants alike have lost their enthusiasm for Daily Deals a la Groupon, Living Social, and a million other copy-cat e-coupon peddlers. To the discerning eyes of the general public, once the novelty of getting “half-off French cuisine” wore off, many of these email-based platforms began looking suspiciously similar to spam. On the merchant side, the initial promise of daily deals either never materialized, or manifested itself in a new set of insurmountable challenges – such as an incredibly lopsided merchant agreement which gobbled up most of a local merchant’s profits while saddling them with all the risks.

Even worse, many establishments who did manage to run a successful deal campaign through the e-coupon platform soon found that the deal-seeking crowds immediately disappeared after the deals ran their course. As it turns out, cut-rate price promotions don’t engender loyalty at all. This effectively left partnering merchants back at square one, or for an unlucky few, utterly ruined financially.

The daily deals financial model is, in its current configuration, probably not business-friendly. More accurately, it is just a remodel, a re-skinning of the age-old practice of showering consumers with coupons – hardly the lauded cure for the marketing woes of a business.

The Card-linked Offers Model

In lieu of these revelations, what is a business to do? In truth, there is no silver bullet fix for low customer engagement, faltering consumer loyalty, or lack of general enthusiasm. Ultimately, the ideal solution is to build a better product, improve customer service, and design a superior customer experience. Groupon and its many imitators failed to add value on all three critical fronts, relying exclusively instead on aggressive price slashing.

Card-linked offers, in contrast, take the idea of ecommerce integration a step in the right direction. The real strength of card-linked systems, and Groupon’s greatest failure, lay in its potential as an engagement tool.

In Groupon’s case, when it came down to it, it was still all about hawking coupons. The only difference was that the act of salesmanship received a technology-appropriate upgrade in the form of a slick website and a well-developed email-farming apparatus. The cultivation of actual customer loyalty was left unaddressed.

Card-linked systems aim to dig much deeper and develop what some call a sustainable business ecosystem, within which consumers, local merchants, and financial institutions all mutually benefit.

The benefits for financial institutions and banks are obvious – more card usage. But, both consumers and merchants also benefit greatly within a card-linked ecosystem. Consumers skip the need to print and cut out coupon promotions and mail-in-rebates, and receive rewards as an easy-to-decipher percentage of their total spending.

No confusion about stacking deals. No worrying about expiration dates. No hassles.

Better yet, deals are individually targeted and directly linked to a credit or debit card, drastically reducing unwanted email inbox filler and frantic check-out counter searching for lost coupons. Merchants benefit from the expanded reach offered by credit card companies. More importantly, pairing promotions directly with specific credit cards effectively allows merchants to “borrow” consumer loyalty from the card providers.

Merchants also gain easy-to-parse, and highly valuable, consumer purchasing histories, which can help inform increasingly effective and individualized promotions consumers will actually act on. All this is to say that card-linked systems are poised to become an entirely new integrated engagement platform, rather than just the reformulation of an old strategy.

For businesses, this could be a transformative development that has the potential to tie all the disparate pieces of conventional marketing practice into simple, unified architecture. As card-linked offers gain wider acceptance, they will eventually become as commonplace as punch cards and membership cards are today. By leveraging a host of equalizing technologies, such as social media and card-linked offers, retailers and business outfits stand a real chance of competing on a wider scale than ever before.

For businesses looking for a way to implement real-time offers to their best customers vPromos can help.

The Makings of an Industry: Card-Linked Offers – Part 1


The Makings of an Industry: Card-Linked Offers – Part 1


Card-linked offers may seem like a relatively new development – a breakthrough very much still in the making – and it is. But the industry as we understand it today, is also the slow maturity of more than two decades of market testing and iteration. In Part 1 of a two-part series, we explore the very recent history of card-linked offers as we know them today.

Hello World 2.0: Card-Linked Offers

2010 saw the rise of Card-Linked Offers, as a distinct marketing segment unique from, and very much intent on superseding, both the declining daily deals phenomenon, as well as conventional loyalty marketing schemes such as reward cards and coupons. To that effect, expansion of the field has positively exploded. 2011 saw a flood of startups and established industry giants alike rush into the field in a series of uncoordinated first attempts at cornering the card-linked offer market before it even crystalized.

American Express Company (AXP), the largest credit card issuer by purchases, began delivering customized discounts and offers to cardholders who opted into the program. In return, participating cardholders allowed AmEx to mine their personal Facebook data.

At the time, this drive for online integration and data collection in return for rewards was largely informed by the rise of mobile and online payments, and the apparent success of e-coupon purveyors such as Groupon. With continual iteration, and the sensational but completely understandable implosion of Groupon’s daily deals model in recent times, the doors have swung wide open for card-linked offers to enter the mainstream.

In October of this year, many of the movers and shakers of the e-commerce, payments, banking, and social media sectors formally formed The CardLinx Association, an interoperability organization promoting the adoption and expansion of card-linked offers. Industry giants, including Microsoft, Facebook, Bank of America, Mastercard, and LivingSocial, just to name a few, see card-linked offers as a keystone of the new consumer experience.

Industry experts have projected earnings from the real-time, locations-based deals sector to surpass 4 billion by 2015. In 2010, that number was just 815 million. But in many ways, so-called static or delayed card-linked offers have existed as a viable marketing strategy for some decades now.

Today’s consolidated systems, in which a single consumer credit or debit card is linked to all manner of personalized discounts, deals, and promotions, is only a degree removed from the relatively simplistic, and already widely adopted, rewards cards issued by banks and other financial institutions. These often points-based systems are, in turn, not so removed from the simplest proprietary rewards cards offered by retailers, grocery chains, and airlines. That means that, from an evolutionary standpoint, the story of card-linked offers begins in the 1980’s.

Join us next week as we dive into the frequent flier programs of the 1980’s (the granddaddy of loyalty programs) and the delayed card-linked systems (think rewards credit cards) of the 1990’s that we still use today. More importantly, we will look at some of the differences between the delayed and proprietary card-linked rewards programs popular today and the rapidly crystallizing real-time card-linked offers sector.

The Makings of an Industry: Card-Linked Offers – Part II


The Makings of an Industry: Card-Linked Offers – Part II


Card-linked offers may seem like a relatively new development – a breakthrough very much still in the making – and it is. But the industry as we understand it today, is also the slow maturity of more than two decades of market testing and iteration. In the second part of our two-part series, we explore the early history of card-linked offers, the delayed card-linked systems from which they arose, and delve into why real-time card-linked offers have garnered the attention and active support of industry giants ranging from Microsoft to Bank of America.

Hello World 1.0: Delayed Cards

In 1981, American Airlines launched their highly successful AAdvantage frequent flyer loyalty program. This groundbreaking foray into loyalty marketing opened up a whole new era of proprietary card-based and points-based rewards initiatives. While literally miles ahead of the humble punchcard, rewards cards still suffered from many of the drawbacks of a static system.

A decade later, credit card companies began experimenting with the integration of rewards directly into their consumer cards. Typically, card companies offered points that consumers could then convert into cash back on their credit statements, or other financial rewards. This system is still popular today, and consumers eagerly play along.

Today, there are in excess of 176 million credit holders in the United States alone. Of that number, 60 percent have a rewards card. Unfortunately for merchants, these delayed-offer systems can become prohibitively unwieldy when applied to the customer loyalty space.

Real-Time Advantage vs. Delayed

One of the key advantages real-time card-linked offers enjoy over delayed-rewards systems (think points), is the manner in which points are redeemed, and the corresponding effect on customer loyalty. With delayed card-linked offers, consumers essentially receive cash back, typically in the form of points, as a percentage of total spending. This financial windfall can then be spent virtually anywhere – thus completely negating any incentive to revisit the original store from which the reward was initially earned. No return visit, no repeat purchase.

In a real-time card-linked offer system, the rewards in question are applied instantly at the point of sale, and more importantly, at the original merchant. This just makes a lot of business sense since, after all, the whole point of merchant participation in card-linked initiatives is to cultivate consumer loyalty. In a real-time, open card-linked ecosystem, as opposed to a proprietary, delayed one, individual local merchants become the primary point of a rewards transaction, putting the establishment at the top of consumers’ minds, and more importantly, on top of their money as well.

Better yet, as one integrated, open system, the new approach to card-linked offers does not lock merchants, and consumers alike, into specific sites, publishers, applications, or card types.

That means everyone wins.

Card issuers continue to drive card usage with an expanded ecosystem of rewards options, consumers get their discounts immediately as opposed to at the end of each month, and merchants get more consumers to return to their establishments.

Card-linked Offers Are Here!

As we have seen, real-time consolidated card-linked offers are the natural next step in this highly iterative process of technological integration and innovation in the offers space. Further more, consumers have proven again and again that they will not be limited – whether by a proprietary rewards system, a lack of technological integration, or any other artificial barrier merchants or financial institutions choose to employ.

Consumers will continue to seek, demand, and ultimately acquire freedom and flexibility in the way they make purchases. Businesses and local merchants who can offer the easiest way for customers to get what they want when they want, will continue to nurture a considerable advantage over their peers and competitors. Microsoft, Facebook, and many other leaders in a variety of markets certainly think so, and see card-linked offers as the best way to do so.

We believe that card linked offers will play a key role in delivering on this promise… – The CardLinx Association

Buy from ISOs


Buy from ISOs


If you have read my blogs, you will notice a bias towards real time card linked promotions and loyalty versus delayed card linked promotions.  As a refresher, delayed card linked promotions put the rewards back on the credit card statement or in some form of cash back or airline points model. That is very 1990s.  The future of card linked offers I believe is real time, which enables the consumer to enroll right at the point of sale, receive real time text or email acknowledgment of points earned, and significantly, automatically redeem the reward back at the same merchant where the points were earned.

For delayed card linked offers, assuming a sale can be made to the merchant to market with delayed card linked offers, enabling the merchant to accept delayed card linked offers is not hard.  All that has to happen is that the merchant needs to sign a contract authorizing his merchant credit card bank to share the data with the matching company, which then shares matches with the marketing company. This means any company can really do this.  The barrier to entry is pretty small.  The benefit to the merchant is smaller still as addressed in my previous blogs.

For real time card linked offers and loyalty, the barrier to entry is much higher.  Real time is harder to implement because it’s integrated into the credit card terminal or the point of sale system (“POS”).  The terminal or point of sale system must do three things.  First, it must redirect the transaction amount to a gateway, which then relays the transaction data back into the data stream.  Second the terminal or POS must be able to allow for registration at the point of sale. And third it must be able to print out the receipt showing points earned or reward redeemed.  If the POS is involved, it has to account for the redeemed offer or reward discount.

There are two channels or industries that make sense for reselling real time card linked; the merchant acquiring independent sales organizations (“ISO”) sales channel and POS companies.  Terminal companies use the ISO sales channel to resell their product as do many POS companies.  Larger POS companies have their own direct sales teams and network of resellers.  Marketing companies are not going to be able to resell real time card linked promotions and loyalty because of the integration requirements described above. This is good for the ISO industry mired in commodity pricing, and looking for the next big thing.

ISOs today are looking for products to compete with the likes of Belly, Level Up, and other loyalty companies that do not touch the payment stream.  As discussed in previous blogs, Real time Card Linked loyalty and promotions require no additional steps to earn points or redeem rewards. Simply pay with the enrolled credit or debit card, and loyalty happens.

The ISO is the perfect party to resell real time card linked promotions and loyalty to the merchant.  2014 is going to be the year of the real time card linked promotions and loyalty.  Stay tuned.

The ISO’s Special Realm


The ISO’s Special Realm


Transaction Trends is posting an article I published. You can find a direct link here or read the article below on my take with ISO’s as a strategic channel for card-linking.

There was a time when ISOs sold magnetic-stripe “loyalty cards,” but demand for those loyalty cards appeared to wane. However, that falloff was not the result of reduced demand but rather poor execution: Customers just did not want to carry another loyalty card. Today, loyalty is in increasing demand, and loyalty provider startups are selling loyalty devices and apps directly to small to medium-sized businesses (SMBs), to the exclusion of ISOs. Thus, two questions arise: Why are ISOs no longer in the loyalty game, and is there an opportunity to get back in? While it appears that ISOs have ceded loyalty to the startups, in 2016 card brands, terminal companies, and Software as a Service (SaaS) loyalty providers are bringing to market terminal integrated card-linked loyalty solutions that vastly improve and streamline the customer loyalty experience for merchants and customers alike—and ISOs are the only ones that can sell them.

The terminal is the ISO’s special realm. If it touches the terminal/point of sale (going forward we will use “terminal” to reference both), the merchant is calling the ISO. If ISOs want to sell loyalty, loyalty must touch the terminal. It makes perfect sense for loyalty to be tracked at the terminal because shopping is the key metric.

According to Forrester Data’s recent “Forrester Wave: Customer Loyalty, Solutions for Midsize Organizations, Q1 2016” report, “Our data shows that improving customer loyalty is likely to be a top marketing priority for 80 percent of decision makers at midsize organizations in the next 12 months. As a result, they seek loyalty solutions that help companies identify and track customers, reward behavior, and drive deeper engagement and relationships.” The loyalty market is big, and SMBs will pay for it.

Who Wants to Download a Loyalty App?

The ISOs’ execution failure opened the SMB loyalty market to firms like Belly, which does not touch the terminal. Belly’s ($99 to $200 a month) product is a separate device that sits next to the terminal, taking up counter space, with the Belly brand standing between the merchant and customer. As with many other loyalty companies, Belly requires the merchant’s customer to download the Belly app to redeem the reward. Because these devices do not touch the payment terminal, the loyalty companies do not need ISOs to sell to the merchant. They sell direct.

Notwithstanding the attempts of the loyalty startups, there is still too much friction with existing loyalty offerings. In addition to not wanting to carry another loyalty card, most SMB customers will not go online and enroll, download an app, provide their mobile number every time they shop, or print a reward. Customers are lazy—and rightfully so. Earning points and redeeming rewards should be as easy as simply paying with the credit or debit card already in their wallets.

Terminal Integrated Card-Linked Loyalty

Terminal integrated card-linked loyalty offers both merchants and their customers a superior, seamless, and easy loyalty execution by tracking loyalty with the payment cards customers already possess. With card-linked loyalty, every time customers shop and pay with their credit or debit card, they automatically earn points and redeem. No longer does a customer have to carry a separate loyalty card, download an app, provide a number with every purchase, or print a reward. The payment terminal, in effect, becomes the loyalty terminal, displacing any third-party device crowding the counter space. Card-linked loyalty becomes part of the payment process—and just happens.

A merchant’s loyalty program should be for the merchant’s best customers, with the goals of being easy and automatic, and increasing spending and frequency. This means the card-linked loyalty solution must empower the merchant to enroll its own customers, and the loyalty reward must be redeemable only at that merchant’s store. To make this happen, the card-linked loyalty program must be integrated into the merchant’s payment terminal.

As mentioned above, the merchant must be able to enroll its own customers. The single best place to enroll members is at the merchant’s point of sale. Once customers leave the store, getting them to go online to enroll and provide a credit card is almost impossible. But if the card-linked loyalty program is integrated into the terminal, linking the customer’s payment card to the merchant’s loyalty program becomes as easy as entering a mobile phone number into the terminal, one time. By integrating with the terminal, the SaaS loyalty provider sees the payment card token in real time, and, if the token is not in the loyalty program, the SaaS provider delivers a prompt to the terminal to enroll the customer. Only if the terminal is integrated with the SaaS loyalty program is it possible for the enrollment prompt to occur. But once integrated, enrolling the merchant’s customers is easy.

Today, card-linked offers are being embraced by Facebook, Twitter, Microsoft, and credit card issuing banks in a coalition format. (To learn more about card linking, go to http://www.cardlinx.org). Presently, card-linked offers are not integrated into the terminal, and, as a result, the discount can only be put back on the credit card statement or in another currency (e.g., airline miles). If a merchant wants its own loyalty program (as opposed to a coalition), then the loyalty reward should be the merchant’s reward, only redeemable back at the merchant’s terminal. Requiring the reward be redeemable back at the merchant drives another visit back to the merchant, which should be the goal of every loyalty program. With terminal integrated card-linked loyalty, when the customer pays with the enrolled card, the reward is automatically deducted from the total bill and reflected on the terminal printed receipt. It is a seamless and easy experience for the loyalty member and the merchant.

Terminal integrated card-linked loyalty automates the loyalty process, and it is the easiest and best merchant-centric loyalty solution in the marketplace. And there is only one industry that should sell it: ISOs.

Who Better To Sell Than ISOs?

SaaS companies, card brands, and terminal companies are or will be offering terminal integrated card-linked loyalty in 2016, and the ISO is the channel that should sell it. In addition to offering a complementary loyalty revenue stream, ISOs will sell terminal integrated card-linked loyalty to reduce churn. Merchants that have thousands of members in their terminal integrated loyalty program will not want to switch payment processor/loyalty providers.

Because card-linked loyalty touches the payment terminal, the exclusive realm of the ISO, the ISO is the logical sales channels for reselling terminal integrated card-linked loyalty. Welcome back to the Loyalty Game.

Will My Loyalty App Stick?


Will My Loyalty App Stick?


Today, the average household has joined 29 loyalty programs, but only actively participates in 12.  Some merchants are going the mobile phone loyalty app route.  But consider that there are over 1.5 million apps out there.  Mobile users only download really important, relevant apps.  On average that is 20-50 apps per phone.  And users delete unused apps. With these hurdles, how does a smaller, less known or less frequented business get into loyalty without being one of the 17 abandoned loyalty programs or deleted apps?

The key to starting any loyalty program is enrolling members. If it is too hard, they won’t enroll. Asking customers to download an app for any merchant other that Starbucks or Walgreens is asking a lot.  Maybe early adopters will hurdle the obstacle.  But what about the other 90% of the customers who want to be loyal, but are unwilling to make the effort to download?

And once enrolled, declining engagement is a serious problem for loyalty programs.  Does that customer really want to take 4 steps to earn points?

  1. Pay, then
  2. Pull out phone
  3. Open the merchant’s loyalty app
  4. Show the mobile loyalty app to the clerk or scan it

That is a lot of work! If earning points and redemption is too hard, the app is getting deleted.

There is a better way . . . linking the customer’s own payment card to the merchant’s loyalty program. Loyalty should be part of simply paying. Every time a customer pays with the customer’s own credit or debit card, they should earn points for that merchant’s loyalty program.  Redeeming the merchant reward should be as simple as paying normally with the enrolled credit card.

It has to be easy. That means no app.  That is card linked loyalty.

Automating Loyalty with Card Linking Part 1


Automating Loyalty with Card Linking Part 1


A loyalty program delivered smartly will attract new customers, turn customers into repeat customers, increase business, and deliver valuable business data and demographic intelligence. While the world today expects elegant solutions achieved through technology and automation, it’s clear that most of today’s loyalty solutions, are still reliant on manual execution. As a result, the loyalty process interrupts the payment process and is often prone to delivering a poor experience for both the customer and merchant.

We can do better. It is time for loyalty programs to enter the twenty first century and become automated. A merchant loyalty program linked to the customer’s payment card offers all parties an easy, seamless, automated, reliable and accurate loyalty solution.

There are typically three basic challenges with loyalty programs that every CMO wants to improve:

  1. Enrollment – Cashiers don’t always ask customers to enroll, and customers don’t always want to supply personal information to a stranger.
  2. Tracking – Again, the problem is that cashiers are not always asking for loyalty numbers or cards associated with loyalty.
  3. Redemption – Customers are not redeeming rewards as expected.  They say it is too hard to download rewards and remember to bring to the store.

The reality is that everyone, including your loyal customers want convenience in their busy lives. One company, British Petroleum (BP), is making it easy for their loyal customers to earn points and rewards.

BP just introduced its card linking loyalty solution at the gas pump. Historically, customers had to swipe their loyalty card or enter a 10 digit number. BP customers can now go online and link their payment card to the BP loyalty card.  

After linking the credit card, a BP customer earns points every time they pay.  No additional steps to take. To redeem the rewards, the BP customer simply pays, and the reward comes off on their linked credit card statement.  Today this only works with Visa, but it is still a huge convenience for BP customers.

Retailers need to make it easier for customers to enroll, track and redeem rewards. That means in addition to letting customers earn and redeem points by showing their loyalty card or providing their mobile number at checkout, we should let our customers earn and redeem rewards with their existing credit or debit card.

Loyalty Program Background and Challenges

Today, a loyalty tracking system is typically manual. This means every time a customer pays, the cashier must ask: “Are you in our reward program?”

This question must be asked every time because a manual loyalty tracking system has no way of knowing whether the customer is in the retailer’s respective loyalty program or not. If a customer is not a program member, the cashier is supposed to ask if the customer would like to join the loyalty program. But many customers prefer not to share their personal info with a cashier. While customers can go online to enroll, once a customer leaves the store, it is highly unlikely that they will enroll.

Typical industry loyalty tracking form factors include:

  • A mobile number to a cashier
  • A mobile phone bar code
  • Loyalty cards

These loyalty tracking systems are manual, and as a result, for the loyalty system to track, the cashier has to ask every time if the customer is in the retailer’s program. This is a tedious process that slows the line and can frustrate customers who previously declined to enroll. Moreover, all cashiers are not created equally. Untrained, inexperienced, shy, introverted and lazy cashiers simply may not ask. These inefficiencies negatively impact enrollment, data accuracy, loyalty points tracking and customer satisfaction.  

With regards to redemption, a fraction of the earned rewards are redeemed. Many members complain that it is too much trouble to print out a reward and bring it to the store.  While breakage may be considered good for certain coupons, it is a negative for loyalty.  

If you want to evaluate your own loyalty rewards gaps, consider the following questions:

  • How easy is your enrollment process?
  • How easy is tracking and redemption?
  • Could automation improve your loyalty program?
  • What percentage of your customers pay with credit cards?

A low adoption and engagement rate for loyalty programs may be remedied with innovation. I will cover further process and improvement ideas in my next article.

Automating Loyalty with Card Linking Part 2: Enrollment


Automating Loyalty with Card Linking Part 2: Enrollment


As we discussed in my last post, there are three essential elements of loyalty; 1. Enrollment; 2 Engagement; and 3. Redemption. Today we discuss card linked enrollment for a merchant’s loyalty program.

There are two types of card linking loyalty options; terminal agnostic and terminal integration.  Terminal agnostic is 100% in the cloud and does not touch the terminal.  In fact that is a major benefit of terminal agnostic card linking.  The card brands, MasterCard and Visa are offering to marketing platforms, card linking solutions that integrate with loyalty solutions, like the BP card linking loyalty solution recently rolled out. But there is one drawback with terminal agnostic card linking; enrollment is too hard.

Convincing a shopper to go online and provide a credit card number for a single merchant’s loyalty program is hard. While an advocate of a major brand like BP may go online and enroll, the average customer for an average merchant is not. It is just too hard.

Another terminal agnostic card linking enrollment option is to first ask the customer to download a mobile phone loyalty app for the merchant’s loyalty program, and then if the app is downloaded, second ask the customer to set up an account in the app, and third, enter their credit card for the loyalty program.

The problem here is that the average smart phone user already has 26.7 apps on the cluttered phone. Remember share of wallet? Now there is a share of mobile phone screen space.  The app is probably not getting downloaded.  The other issue is that 70% of the total usage is coming from the top 200 apps. (Nielson   06-11-2015) What are the chances the customer will take the time to download the loyalty app just to link the credit card to the merchant’s loyalty program?  There is another way.

Terminal integrated card linking excels at enrollment, and here is why.  When the customer pays with a payment card, a card linking platform like vPromos in real time can see if the payment card token is in the loyalty program.  If not, a message like the one above is sent to the terminal, prompting the customer to provide a secondary unique loyalty identifier like a mobile number.

Before EMV, trying to integrate card linking with point of sale systems was hard. There were just too many POS systems to integrate with. And POS systems were notoriously unwilling to make it easy to integrate because of PCI requirements.

After EMV, the payments landscape is changing. Now most POS companies are no longer processing credit cards. That responsibility of credit card processing is left to the terminal companies. There are just a handful of terminal companies, and these companies are entering the card linking space.  For example, Verifone, the terminal leader in the US, is taking the lead in the terminal space with its Card Commerce initiative which will enable terminal integrated card linking. Terminal integrated card linking is about to take off in 2016.

What are your thoughts about how to take advantage of terminal integrated card linking?

The Terrible Idea of Terminal App Stores


The Terrible Idea of Terminal App Stores


Jordan Thaeler makes excellent points against the POS App store in his recent article, POS App Stores Don’t Work, So Shut Up.

While his article focuses on POS App stores, the terminal App store model is now being floated by leading terminal companies. Like the POS App store, a terminal App store is also a bad idea for the terminal company and its independent resellers (ISOs), primarily because of channel conflict and commoditization of the value added product (or App in this case).

Integrating with POS companies as Thaeler addresses was a huge challenge.  There were just too many thousands of them and most did not have the bandwidth to work with third parties. But with EMV, many POS companies are getting out of payments, leaving a manageable number of terminal companies to partner with (especially for third party developers focused on payment linking).

ISOs today are looking for value added solutions like card-linked loyalty, because payments have been commoditized, resulting in 20% attrition and vastly reduced processing revenues.  I applaud the terminal companies opening up of APIs to third-party firms to develop software on these terminals. They say it is coming just as soon as they free up resources from EMV.  I boo the idea that the way to sell these third party value added solutions is direct to the merchant on some sort of Merchant Terminal App store, for all of Thaeler’s reasons and more.

When comparing the consumer Apple App store to a POS App store, Thaeler wisely observes: “The biggest distinction, however, is that businesses do not do self-discovery.”  Is a terminal company expecting the merchant to go through a list of Apps and make a selection on its own? If the answer is yes, then that spells the end of the terminal company’s ISO channel. If ISOs are to exist, they need to add value and make money.

A low fidelity self help product like Square expect its merchants to figure out the Square product for itself.  Copying Square’s self help model with a self help Terminal App store does not mesh with the current Terminal/ISO reseller relationship.  Today, terminal companies leverage thousands of independent resellers to distribute its terminals to millions of  SMBs.  Terminals are more secure and can do more than a product like Square, and as a result require a human touch to sell, set-up, and support.

If these terminal companies allow merchants direct access to dozens of competing loyalty programs in an App store for example, isn’t that the definition of Channel Conflict?  “Channel conflict occurs when manufacturers (brands) disintermediate their channel partners, such as distributors, retailers, dealers, and sales representatives, by selling their products directly to consumers through general marketing methods and/or over the Internet.” (If a Terminal App store self help model is to be used, then it should be entirely self help, like Square. You can’t have it both ways.)   In addition, the numerosity of loyalty programs will result in a price war to the bottom.  This channel conflict and commoditization will  eliminate profits for ISOs, the third party developer, and the terminal company.

An ISO agent in effect is a consultant, expert in payments, and soon to be expert in card-linked loyalty and promotions.  The ISOs, exclusively, should be able to pick and choose what terminal integrated value added products they want to resell. Only the ISOs should be able to peruse an App store, and pick the products it wants to sell and differentiate from its competition.

These Apps on a terminal are not going to sell themselves.  Let the ISO excel at what it does in defining customized solutions for its customers and sell these value-added terminal integrated solutions to its own customers; its merchants.

Part 1. Its the Wine, not the Vessel that Matters; Why Mobile Wallets Failed


Part 1. Its the Wine, not the Vessel that Matters; Why Mobile Wallets Failed


On November 16, 2010, T-Mobile, Verizon, and AT&T formed ISIS (Softcard), in order to enter the mobile wallet space, initiating the mobile wallet war.  Google had its wallet, banks were building their own, and many tier one merchants had no interest in paying or sharing their data with the mobile carriers or Google. Then ApplePay came along and everyone said ApplePay had figured it out and would win the war. The problem with mobile wallets is that the war was initially fought by firms trying to fix a problem that did not exist and not knowing what they were really fighting for, payment integrated marketing.

As of July 2016 all of the mobile wallets lost the war.  After BILLIONS of dollars spent (Soft Card ~ $800MM,  Google Wallet $1 billion+…) and little consumer or merchant adoption, 

  • Google Wallet initially stumbled because the carriers would not let Google Wallet get on their phones to compete with the carriers’ Softcard solution;
  • Softcard failed and ended up selling its assets to Google;
  • MCX laid off half its force (~40 people) and pivoted, letting much bigger and richer players battle for the consumer, and letting each retailer pursue its own wallet solution;   and
  • Apple has made little traction with consumers.

Why did mobile wallets fail? One reason is mobile wallets are not easy.  Consumers have to:

  1. Set up a payment card in the mobile wallet;
  2. Learn a new behavior (pay with phone instead of card); and
  3. Make sure the merchant location accepts mobile payments

Right there, with those seemingly simple steps, the mobile wallet lost 99% of consumers. Mobile wallets failed because payments is NOT broken for consumers. Payments may be terrible for retailers because of the fees, but consumers are covered with their ubiquitous plastic that works everywhere and is easy to use. 

But why were these battlers fighting with mobile wallets in the first place?  These firms focused on the vessel, and not what was in the vessel.  Payment integrated marketing, offers and loyalty tied to the customer’s payment method, is what matters.  But payment integrated marketing will not work if only 1% of consumers have access to it.  But there is a solution, and it exists today.  The Holy Grail (vessel) capable of powering  payment integrated marketing is the ubiquitous plastic that works everywhere and is easy to use; the customer’s own credit card.

Part 2. Why Card Linking is the Holy Grail.

Part 2: Why Terminal Integrated Card-Linked Loyalty is the Holy Grail


Part 2: Why Terminal Integrated Card-Linked Loyalty is the Holy Grail


In my last post Part 1. It’s the Wine, not the Vessel that Matters; Why Mobile Wallets Failed, I explained that the mobile wallet players were playing the wrong game because:

  1.   Credit cards work perfectly fine for payment; and
  2.   Mobile wallets are just a novelty so long as customers have to ask if the store accepts mobile payments.

After further thought, the vessel does matter, especially if you have found the Holy Grail.  In this vessel analogy, a merchant loyalty program is the wine that merchants offer, so their customers will:

  1. Give up personal information e.g. mobile number
  2. Be marketed to e.g. text message loyalty updates
  3. Be loyal and not shop competitors.

The Holy Grail is the vessel that will seamlessly and automatically make this happen.

While a Starbucks customer may download the Starbucks App, they are not downloading an App for smaller merchants.

Loyalty enrollment, tracking and engagement must be simple, seamless, and automatic, and that is what terminal integrated card-linking excels at.

Terminal integrated card-linked loyalty allows the customer to link her own payment card (credit or debit) already in her leather wallet, to the merchant’s loyalty program, so that every time payment is made, loyalty points are automatically earned and rewards automatically redeemed, at the terminal.

Terminal integrated card-linked loyalty allows the merchant to easily enroll its own customers in its own loyalty program, at the terminal, by linking the payment card with the customer’s mobile number. And there is no App or mobile wallet needed.

Terminal integrated card-linked loyalty makes it possible for small and large businesses to offer their customers the most advanced, automated and easy loyalty solution in the market place.  And that is the Holy Grail.

Have you implemented the Holy Grail in your business?

The Impending Battle for Card-Linking


The Impending Battle for Card-Linking


Jeff Mankoff, founder and CEO of vPromos, discusses two ways that card-linked offers can be delivered, linked and redeemed: cloud card-linking and the second is terminal integrated card-linking. Each has very different ramifications for the retailer and customer; cloud card-linking is easy to implement and get started, while terminal integrated delivers a better merchant and customer experience.

          Read the full article at: www.cardlinx.org