Mar 31 2010

Brand Loyalty For Life

Harley-Davidson is commonly cited as having one of the most loyal following of any brand.  A factory sponsored owners group called, Harley Owners Group (H.O.G.) has more than 1 million members and more than 1,400 chapters worldwide.  Harley enthusiasts regularly partake in group rides with Sturgis being referred to as “the granddaddy of all motorcycle rallies” as per Harley-Davidson’s website. 

Looking to capitalize on Harley-Davidson’s brand loyalty, Ford introduced an F-150 Super Crew Harley-Davidson edition pick-up truck fully detailed with prominently displayed Harley-Davidson logos.  Going one step further, many loyal fans have the H-D logo permanently tattooed. 

One blogger wrote, “People get tattooed for a variety of reasons, but a common desire is to honor something for which one has a deep and abiding reverence.”  Beyond a handful of companies, including Harley-Davidson, most companies do not instill such deep, devoted feelings.  However, as one blog, albeit one titled, “Ugliest Tattoos: The Gallery of Regrets” has  a webpage devoted to brand loyalty.  Companies such as Cheetos chips, Triscuit chips, Oreo cookies, Elmers Glue, Hamburger Helper, Converse All-Star, Newport cigarettes, Velveeta cheese, Cracker Barrel dinner, and Monster energy drink are all tattooed on at least one person. 

In looking for new engagement metrics, the “tattoo metric” may not be far from reality.  How many people would tattoo your company’s logo on their arm or back?  What does your answer say about the way your company is perceived by its constituents? 



Mar 26 2010

More To Loyalty Than Frequency?

“You mean there is more to loyalty than just frequency?” YES! In an interview between Mark Vondrasek, Starwood’s senior vice president of interactive and loyalty marketing, and USA Today, Vondrasek described Starwood is looking at factors beyond just frequency in guest says. Referring to Starwood’s new loyalty program, Vondrasek said, “We looked at factors beyond just frequency, which is the key measure in traditional hotel loyalty programs. For instance, we evaluated factors including guest’s profitability, their lifetime growth potential and their ability to influence travel by others. We even targeted some travelers who were loyal not to Starwood, but to our competitors.”

This is one case where Starwood is leading the pack. In what looks to be a future Harvard Business Case Study, Starwood has taken the initial step in welcoming selected guests into their loyalty program. This is where Starwood segregates itself from the pack. Traditionally, hotel guests start off in the lower tiers of a loyalty program and then as their total stays increase so does their standing within the hotel loyalty program. With Starwood, however, it seems that Starwood is welcoming guests with the full benefits of their loyalty program in an attempt to woo hotel guests.


Mar 23 2010

God of Loyalty . . . and Fortune and War

Napoleon Hill once said, “Lack of loyalty is one of the major causes of failure in every walk of life.”  This quote could very well could be a summary for the Chinese General Guan Yunchang, God of Loyalty, Fortune, and War.  Westerners will likely see the connection between war and fortune, for a powerful country can loot a weaker country during times of war.  In actuality, General Guan Yuchang is a peaceful deity who uses his skills to avoid the confrontations of war. Thus, by avoiding war his country is able to prosper.  This period of prosperity then creates loyalty among the countrymen.  However, not all battles could be avoided.  During one battle when General Guan Yunchang is said to have been captured and forced to decide between switching alliances or facing death.  Holding steadfast to his virtue of loyalty, the General chose the latter.  General Guan Yunchang is traditionally found within Chinese restaurants, displaying a sword and helmet, being serenaded by candles, incense, fruit, and tea.



Mar 19 2010

Life Saving Loyalty

Loyalty is an integral part of forming relationships and actualizing overall happiness.  Jim Becker, a 79-year-old Green Bay Packer fan who has attended games for 56 years, recently learned this lesson.  As a modest man with a wife and 11 children Becker regularly sold his blood to offset the cost of season tickets.  Becker’s doctor later found that his father died at age 43 from a condition of the blood retaining too much iron.  Donating blood is the only known treatment for this condition.  Thus, Becker may have also died at a young age had he not gave blood as a result of his loyalty to the Green Bay Packers.


Mar 15 2010

You have a loyalty program?

About two years ago I found the best deal ever, a two year contract for $100 per month “Unlimited Everything” plan with Sprint. I thought, “What a great concept, unlimited everything for a little more than most plans.” The relief of not worrying about going over my minutes each month alone is worth a few extra dollars to me. I am a fully satisfied customer who has never experienced a drop call, inaccurate billing (its always been $100 per month), or any other issues. I tend to use my fair share of minutes and have no intention to switch carriers or plans. Thus, thank you Sprint.

I am a loyal customer. However, despite all my acclaim for Sprint I am perplexed by a 14 page pamphlet I received in the mail today promoting the “one-year anniversary of Sprint Premier,” Sprint’s loyalty program. Over the course of a whole year there was never any introduction or reminder of this program. One may ask what exactly does a loyalty program celebrating its one-year anniversary that a loyal user has never heard of include? The Sprint Premier loyalty program includes a $5 reward or 75 bonus minutes, “Just Because” sweepstakes to shows and golf, early phone upgrades, 25% off accessories, courtesy plan check-up every six months, and inclusion in the Premier Community online forum. In all, a lot included in this loyalty program. While the sweepstakes, early phone upgrades, discounted accessories, and courtesy plan check-up are appreciated, the other rewards are lacking. First, the $5 reward equates to less than a 0.5% reward compared to the annual $1200 I spend with Sprint. Second, the Premier Community online might be great if I feel a strong desire to communicate to other Sprint customers.

Oh yeah, only Sprint customers with individual plans of $69.99 per month, family plans of $99.99 per month, or Sprint customers for at least 10 years are allowed access to Sprint Premier.

Sprint is not alone in offering lacking loyalty programs, many other companies also offer loyalty programs leaving customers desiring more. Three key points to remember when creating a loyalty program as a point of competitive difference is to make sure you offer rewards or benefits that are:

1) Meaningful

2) Perceived as real value added

3) Relevant to or consistent with your products and services

By following these rules, companies can create successful loyalty programs.

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

Mar 11 2010

Where Does Your Client Loyalty Stand?

Are your clients loyal to you and your firm or to their bottom line?  Donny Deutsch, host of CNBC talk show The Big Idea with Donny Deutsch and author of Often Wrong, Never in Doubt said in his book that, “In advertising, client loyalty is to the bottom line, not to the supplier.”  I am inclined to think that this is true in most industries.  Suppliers of financial services, raw materials, lodging and any other commodity can be replaced.  As Deutsch said, “The buyer can find it down the street better, cheaper, packaged more seductively, and you’re gone.”  To prevent mutiny suppliers will often offer discounts, incentives, terms, promotions, and loyalty programs to increase sales.  In response to this Deutsch asks, “How valuable is your product if you’re willing to discount its value?” 

 Regularly discounting products and services for short term gains may only work in favor of the supplier.  After all, do consumers really want or need to increase their inventory levels just because their supplier is discounting its products or services in an attempt to benefit themselves? Probably not, but consumers can sense desperation and will consume according to their best interest. 

 To break this downward discount cycle firms would benefit by developing mutually beneficial relationships with consumers.  A firm that charges a fair price will not need to discount.  Granted this means for a superior product or service a superior price is justifiable. However, the consumer should never be gouged as this would not be mutually beneficial.  By creating mutually beneficial relationships consumers will come to trust their suppliers and develop a loyalty that transcending a temporary discount.