Is Flybuys back?

I recently heard colleagues in my office talking about emails and coupons they had received from Flybuys, and it made me wonder: is Flybuys really back?

In the heyday of Flybuys in the 1990s everyone seemed to have a card. Run by the now defunct Coles Myer group, you could earn points at a variety of stores across the country. Despite well trained sales staff continuing to ask whether you had a Flybuys card at every opportunity, sentiment towards the program seemed to have changed drastically over the last 10 years. Customers appeared to question the value of a program that they had been using for some time without delivering any real rewards – did anyone ever get enough points to do something with under the old system? Flybuys started looking more like a data collection program, and our enthusiasm to use it starting waning.

With Coles’s purchase by Wesfarmers and it’s subsequent transformation, Flybuys has also been given the makeover, and it appears to have worked at least from a consumer standpoint. It’s relaunch faced by Dawn French and coupled with a My-5 discount on your favourite 5 items was brilliantly executed, it’s points seem to have a higher perceived value than previously, and all of a sudden it’s cool to bring out your card again.

The greatest change however has been the clear use of big data to drive tactical offers to gain a bigger share of each consumer’s wallet. Like my colleagues who compared notes on the topic recently, on a weekly basis now I’m getting targeted emails with “offers just for me”, and scarily enough each item in the email are things I always buy. Whilst this can walk a fine line with being creepy (target in the US got in trouble for this a few years ago), on the whole Flybuys seems to be walking the fine line well.

The new Flybuys is delivering a substantially stronger value exchange with consumers, and is hopefully driving a strong business outcome for the Coles group. It will be interesting to see how Woolworths Everyday Rewards will rise to the challenge.

Deriving new revenue from your loyalty database

An interesting article today in the Sydney Morning Herald reporting that Priceline Pharmacies has sold access to its 4 million-strong loyalty database, Sister Club, to an insurance group. Under a five-year deal with ACE, travel, accident-protection and health insurance products will be promoted to Priceline members via electronic and direct mail.

Whilst the practice of deriving revenue from commissions by cross selling third party products to loyalty databases is nothing new, it will be interesting to see how long consumers will be willing to accept the practice in an environment increasingly concerned about privacy. It’s impact on the opt-outs and marketing preferences of your loyalty base may depend heavily on just how well that cross sell is integrated into the existing loyalty communication strategy.

If the criteria for strong loyalty communications are timely, relevant messaging that reward your customers, it may be difficult for pure insurance cross sell campaigns to stack up against other comms directly related to the pharmacy based loyalty value exchange. Unlike a bank which has far wider scope of big data at its disposal, will a pharmacy be able to identify customers insurance needs based on their pharmacy purchasing habits and channel those insights into timely messaging?

It’s a question facing many companies as their loyalty programs become successful and grow to meaningful scale: do these additional revenue sources add or detract from your value exchange with customers?

Retention key loyalty program driver: Forrester

Latest research from Forrester suggests that retention is the top driver of organisational investment into loyalty programs.

According to the Forrester study, “The State of Loyalty Programs 2013,” as outlined by Loyalty360 the top three business objectives for customer loyalty programs are customer retention (70%); customer engagement (64%); and revenue (34%). Only 14% cited customer experience as an objective.

Whilst it could be argued that customer engagement and retention are all driving similar outcomes anyway (one drives the other) – it’s interesting to see the syntax the respondents are favouring.

Also interesting in the article was that 50% of those interviewed for the study saw their loyalty budgets rise during the past two years, and only 10% saw a decline. Again more evidence of companies recognising the importance of continuing to invest in this space.

Branson on building brand loyalty

Richard Branson is often regardless as one of the best brand creators in the world. The powerful brand he created with Virgin has spun off into countless products and industries. Whilst each new venture has experienced varying degrees of success, one common threat of all of the enterprises has been a consistent set of brand values based around challenging the status quo and providing exceptional customer service.

Branson often talks about his passion for customer services and getting the value equation right by building service as a key competitive differentiator. I particularly like the simplicity of this quote:

“If you win people over, the profits will follow. The first step in building a customer-focused business is to ask yourself: What can we can offer customers that others aren’t, or won’t, because they are so narrowly focused on profit? If you base your new business on this premise, it will be much easier to find an edge over your competitors.” Richard Branson

Finding the balance between service cost and expense management can be an interesting equation, but one worth testing and getting right in order to grow customer loyalty and your long term bottom line.

The rest of the article about Branson is at Entrepreneur.com.

Impact of technology on customer loyalty

A nice infographic from the Huffington Post outlining 10 ways technology can enable customer loyalty.

My particular favourite is number 3 – giving people choices. The amount of customisation capability that technology is increasingly providing is driving a step change in how organisations are able to connect with customers and drive loyal behaviours. If marketing continues to moves to be on a more 1:1 basis, the chances of getting that behavioural outcome have never been greater – as long as you know what motivates your customers!

Using big data to transform retention strategies

Big data has the power to transform the relationship companies have with their customers. There are many examples out there of how big data is creating intimacy in the customer relationship – allowing what would otherwise be regarded as impersonal channels and touch points to deliver targeted, relevant and meaningful conversations, offers and experiences that can drive loyalty and competitive advantage.

This article in CMO discusses how American Express is using big data to conduct predictive analysis to drive attrition reduction. Predicting customer attrition is nothing new in financial services, but many organisations tend to do their analysis on only two or three metrics (such as changes in spend volume or payback percentage over time). What’s interesting about the American Express approach is how big data analysis can allow a much greater set of data inputs. The article says Amex’s model utilises “150 data variables … including customer charge volumes and values, merchant information, industry data, geographic location and more.” It would be really interesting to understand the incremental benefit these additional data points bring to the model over a basic approach, but judging by Amex’s response it seems like the exercise was well worthwhile.

Even when the model is established and working, the next big challenge facing organisations in reducing attrition is how to use this analysis to deliver meaningful and timely campaigns that will change customer behaviour. Amex says they are using the model “to tailor suitable communication and follow-up activities, such as direct or electronic mail or calls from the outbound team”. Testing loyalty campaigns like this not only requires significant buy-in to the analysis framework, but also a real prioritisation of effort to test the effectiveness and ultimately ROI of each campaign. With the usual constraints of resources and budgets, not to mention customer contact resting rules and the need to meet sales targets, it can be difficult to agree a testing framework, particularly if the payback of these campaigns is longer term or more complex to calculate.

There is no doubt that investing in customer loyalty is worth the effort. Significant benefits await companies that can crack the code and find ways of identifying disengaged customers and how to turn that relationship around.

The importance of making a great company culture

Just saw this great interview with Tony Hsieh, CEO of Zappos: Tony Hsieh, Zappos, and the Art of Great Company Culture

Many companies are embarking on internal transformations to be customer centric, and this article reinforces the importance of corporate culture in driving an organisation’s success.

One of the biggest levers in customer centric transformation strategies is to change the way you recruit and types of people you hire. With this in mind I was particularly interested in the comment that at some point during new staff training, Zappos offers $4,000 to the new employee to quit and walk away from the company.

Hsieh says that “when new employees turn down the money, they turn out to be much more passionate and engaged because they realize that it’s a place they really want to be and contribute.” What a great idea!

Defining your “why” and customer value exchange

Many long established companies have revisited their “why” since Simon Sinek’s famous book and Ted Talks video first came on the scene a few years ago. The insight-out approach challenged us to define why our companies exist and from that ask whether the “what we do” and “how we do it” support that “why”. Leading an established financial services company through these questions was a complex and interesting assignment, and one that contrasts sharply with the ease of which new start-ups can approach these questions to define their organisation’s values.

Ultimately, figuring out why your company exists is about understanding how you connect with your customers to service their needs. Another way to do a strategic exercise like Simon’s is to simply examine your oragnisation’s customer value exchange. It’s about asking the question “what are we giving our customer for their continued loyalty, and how does it compare to their expectations?”. At every stage of your customer life cycle you need to be showing customers how good it is to be your customer and why they shouldn’t be looking anywhere else. Every time they purchase from you, or pay your fees and charges, your customers should know why its worth it.

Many companies pay particular importance to their customer value exchange at the beginning of the customer relationship – welcome notes, thank you calls, surveys – but it can be much harder to continue to engage and prove value in the middle of the life cycle. Successful companies have customers that know the value of their relationship at all key moments of truth – they know that car company will be there for them if there are issues between regular services or that they are earning great rewards everytime they spend on their credit card.

How a company connects with their customers and delivers value goes right to the heart of why they exist.

See the famous Simon Sinek video on YouTube.

Product Development Trends

I’m a huge fan of reading about consumer trends – and this article provides some great background on how mobile, data and social trends are influencing online product development.

Trends in product development

These trends clearly extend beyond online product development – they impact the very way organisations are interacting with our consumers. The companies that find ways to ride these trends and develop meaningful competitive advantages and connections to customers are going to win long term.

Customer loyalty as a factor in stock price growth

Just found this interesting article on the connections between customer loyalty and sustained stock price growth.

The Starbucks Effect

Would be great to see more empirical analysis on this. Most companies would clearly be measuring loyalty and customer relationship depth but how many would see this as a direct lever for stock growth?