Mar 12 2010

From Pudding to Pickles

Why would any firm feel the need to reward consumers with an unrelated service or product in order to increase loyalty? Oddly enough many firms regularly engage in this behavior. Many firms reward their consumers with airline points for consuming their products. One of the first people to exploit this loyalty reward was David Phelps, a 35-year-old Davis, California, engineer who earned 1.25 million frequent flier miles by cleverly exploiting a Healthy Choice promotion that offered air miles for products purchased. Philips ended up with $25,000 to $75,000 in free travel by spending only $3,140 on pudding cups, the least expensive product in Healthy Choice’s brand family. Thus, earning Phelps his nickname as the “Pudding Guy”. Ironically, Phelps did not even consume the pudding cups, but rather he donated them to a local food shelter.

Many more “loyal” consumers have followed the Pudding Guy’s lead by exploiting other offers in order to earn loyalty rewards paid out as through airline miles. According to Wall Street Journal article, Miles for Nothing: How the Government Helped Frequent Fliers Make a Mint, by Scott McCartney, “At least several hundred mile-junkies discovered that a free shipping offer on presidential and Native American $1 coins, sold at face value by the U.S. Mint, amounted to printing free frequent-flier miles. Mileage lovers ordered more than $1 million in coins until the Mint started identifying them and cutting them off.” One patron, “identified by his online moniker, Mr. Pickles, claims to have bought $800,000 in coins.” In all, Mr. Pickles earned over two million miles through American Airlines. Similarly, Mr. Pickles did not use the coins, but rather deposit them at his local bank.

Link to: Miles for Nothing: How the Government Helped Frequent Fliers Make a Mint

Feb 17 2010

Loyalty Program or Annoyance Program

USA Today has recently published two articles discussing hotel loyalty programs.  The first article discusses Hilton Hotel’s devaluation of their beloved customers loyalty points, and the second article discusses loyalty programs top complaints.  Neither article presents a pleasant picture for hotel loyalty programs.  One article focuses on taking away a benefit, a form of punishment, while the other article focuses on the loyalty program as an annoyance as opposed to a benefit. 

The author claims that “hotel chains are targeting their most loyal customers because they tend to travel more.”  Is this really the case?  There are several possibilities: (1) a consumer may travel a lot and join several hotel chains loyalty programs as reader, racer03 commented that he belongs to Hilton Diamond and Marriott Gold or (2) a consumer may travel a significant amount and belong to only one hotel chain.  I believe that most loyalty programs target the second type of consumer.  However, these loyalty programs are missing the true value of the first type of consumer who belongs to several loyalty programs.  If the loyalty program was truly effective, then members would not join multiple programs. 

InterContinental Hotels Group’s (IHG) Chief Marketing Officer for the Americas region, Eric Pearson, strongly believes in IHG’s loyalty program.  Pearson makes the assumption that “an average-level PCR [IHG’s loyalty program] member is twice as profitable as a non-member, and an elite-level member who stays more often is 12 times as profitable than an average member.”  The logic that high volume consumers are profitable is a misconception.  A strong inward cash flow does not equal a profit if there is an equally strong outward cash flow spent on  loyal consumers through perks, rewards,  and discounts.  In reality, an average consumer who may not create the most revenue, may be the most profitable.  

USA Today Articles:

Loyalty Programs: Study Reveals Top Complaints; Spam Tops List

 Will Other Hotel Chains Follow Hilton in Devaluing Loyalty Points Next Year?

Dec 2 2009

Interview with Wayne Hurlbert

Wayne Hurlbert, founder of Blog Business Success, a leading blog about current business topics, discussed why loyalty matters. 

 The entire interview is available as a free on demand podcast and can be downloaded here:

To find out why Wayne Hurlbert recommends Why Loyalty Matters “to anyone seeking a fresh approach to improving corporate productivity, employee engagement, customer satisfaction, and enhancing personal happiness,” read his full book review at:

Sep 27 2009

Around Town



Reprinted with permission from The Free Press

Around Town by Mary Giuliano September 13, 2009 (Fernie, Canada)

Faith has been a constant in my life yet recently when asked how I start my day as I replied “with prayer” I realized that I had just set myself up for criticism.

Prayerful people should have attributes of a saint but reality tells me I’m far from that designation.

But a routine of scripture readings with petitions for help and guidance is equivalent to a good meditation that is definitely good for spiritual, emotional and physical health.

This introspection resulted from a conversation with a retired attorney who casually told me he’d begun his professional life as a devoted Roman Catholic monk. After six years he left disillusioned holding the belief the Bible wasn’t the word of God and wondering if God even existed.

So what brings an individual from a deep place of Faith to having none? Could it be that Faith really is a choice?

The Catholic missal says “We choose to believe, this involves risk, to believe in nothing is a form of death, to risk nothing is to die as a human being.”

A book titled “Why Loyalty Matters” has caused a lot of thought as well. “Loyalty”, say authors Timothy Keiningham and Lerzan Aksoy, “like any virtue can go too far and become toxic but it’s still an important fundamental value of life.”

Society has become less loyal today but research finds people believe they are loyal but are surrounded by not so loyal friends. The authors say that if we don’t find our friends to be loyal “odds are that we arent either.”

In the workplace long time workers are no longer valued. Companies going through tough times downsize and layoff although it has been proven that in the long run companies downsizing rarely realize the “cost savings or efficiencies despite the corresponding pain to customers and employees.”

Regarding loyalty in politics, government is successful when those entrusted with the honor of representing people work for the betterment of society, “compromise and honest discourse are the nature of political life, politicians shouldn’t practice extreme partisanship. Adding that sometimes loyalty to a group or cause can become evil, “never, ever ignore your moral compass.”

About religion, “emphasis on religious differences has led to some of mankind’s greatest sins such as the desire to root out heretics and to convert or eliminate heathens that ultimately led to an out group brutality. All too often, we have just enough religion to make us hate, but not enough to make us love one another.”

In ending the authors state, “The most valuable thing you can give is not money. It’s you. There’s nothing more powerful than the human will, nothing more precious than the human spirit.

Through loyalty, we literally invest that will and spirit to create something greater than we can achieve alone.

Loyalties are signs of the types of people we choose to be, the foundation of our character; demonstrating what we value, believe and what we want our world to be.”

And so I choose loyalty to faith, family, friends and community.


© Copyright 2009,


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Sep 27 2009

Do You Always Buy One Brand Of Gasoline?

Do you always buy one brand of gasoline?   According to a recent study by The NPD Group, a market research firm, which asked consumers just that question, only 28 percent of respondents in the first quarter of 2009 answered yes, as opposed to 34 percent of respondents in the first quarter of 2000.   Further analysis by NPD reveals that the most loyal consumer strata (those over 65) choose one brand of gasoline because of the firm’s credit card loyalty program.  

But this is not necessarily real loyalty.  Customer loyalty requires an emotional bond, connection with the brand in addition to purchase behavior.  The least loyal consumer strata (those 18 to 29) reported that loyalty is driven by convenience store offerings.  

David Portalatin, industry analyst for NPD’s automotive unit, said, “It’s going to take best-in-class retailing, including fresh food offerings and a diversity of products and services to attract and retain drivers’ fuel purchases in the future.”   This is an interesting observation in that the over 65 strata is loyal because of discounts and perks provided through the loyalty program, while the 18 to 29 strata is loyal because of convenience store offerings, not price.  

One convenience store chain, QuikTrip, offers 24 different fountain products and encourages consumers to play with their drinks by providing drink recipes, such as: Kiss the Rooster, Blue Thunder, and Shake It Up Baby.   Just as important, QuikTrip’s mission includes a commitment to quality and a commitment to do things right through quality employees, quality store facilities, quality management, quality store precautions, and quality in community support.   Just in case they missed anything, the mission also includes, “Quality in everything we do.   We guarantee it.”   How many stores, let alone convenience store, do you know that are committed to quality store precautions (such as brightly lit lots and stores), provide endless drink options, and even have a mascot named “Wally,” who is labeled as “a certain kind of kid we all know”?   While Quiktrip has yet to expand to the East Coast, whenever this author is in the Southwest, you know where this author is going.


Aug 4 2009

Is the recession killing worker loyalty?

Here is an interview with Gary Baumgarten of Paltalk

YouTube Preview Image

Jul 29 2009

What if your co-worker is stealing your ideas?

If you are smart and have consistently good ideas, then it opens you up to having your ideas stolen by conniving co-workers. Especially if you are new and don’t know office politics,” says Lerzan Aksoy, professor at Fordham University and co-author of the book Why Loyalty Matters.  How can you protect yourself against such situations?

Jul 29 2009

Smart Planet: Loyal or lucrative customers may not be the most profitable customers

A few years back, the head of a business intelligence tools vendor that served the banking sector made an interesting revelation to me about what some of his banking customers were learning. While they all had chased the high-income, high-deposit customers to increase profits, analysis of their revenue streams showed an entirely different picture: that their most profitable customers came from the lower income, lower-deposit end of the scale. How is this so? Because these people had to pony up fees for overdrafts and not meeting minimum balances and so forth.

Jul 24 2009

News from Good Morning America’s Tory Johnson’s Web site — Women For Hire

The reality is that our relationships equal our personal happiness and our professional success. As managers, our success depends upon getting the most out of the people in our organizations, and building relationships with our customers. And for us as individuals, everything we want to achieve in life is going to be accomplished with and through our relationships with others.

The glue that binds our relationships together is loyalty.  Read more about why loyalty is important… Even at a time when companies fire even the most loyal employees – people who truly sacrificed for their companies.

Jul 24 2009

How Can Recognition in the Workplace Create Loyalty?

We are usually very quick in criticizing others but not very good at recognizing the things they do for us, completmenting them or even patting them on the back for their great work.  Our dear friends Chester Elton and Adrian Gostick and authors of the bestselling book the Carrot Principle have their recet newsletter out.  How does recognition and reward link to we as employees feeling more loyal to the company we work for?  Check out the newsletter.