Going the Distance: Four Ways to Build a Better Customer Loyalty Program for Your Brand

It’s easy enough for a customer to join your loyalty program, especially when you’re offering an incentive such as discounts. All your customer has to do is give out some basic information, and voila! They’re in the fold, a brand new loyalty member with your company. From there, it’s happily ever after. You offer the perks; they stand solidly by you, bringing you their continued business. Simple. Or is it? In reality, just how many of those customers are act ively participating in your loyalty program? Do you know? Sure, loyalty program memberships are on the rise according to market research company eMarketer, having jumped 25 percent in the space of just two years. However, that figure may be a bit misleading. The truth is that, while loyalty program sign-ups may be more numerous, active participation in such programs is actually in decline. At the time of the study, the average US household had memberships in 29 loyalty programs; yet consumers were only active in 12 of those. That’s just 41 percent. And even that meager figure represents a drop of 2 percentage points per year over each of the preceding four years, according to a study by loyalty-marketing research company COLLOQUY.

When discounts just aren’t enough

So what’s a brand to do? How can you make your loyalty program worth your customer’s while—as well as your own? After all, gaining a new loyalty member doesn’t mean much if your customer isn’t actively participating in your program. Consider this: Does your customer loyalty program offer members anything different from what your competitors are offering? Chances are your program includes discounts. That’s a given. And what customer doesn’t appreciate a good discount? But when every other company out there is providing this staple benefit in comparable amounts, it becomes less and less likely that customers will remain loyal to any one particular brand. Frankly, it’s all too easy for customers to get lost in a sea of loyalty member discounts. They’re everywhere. In fact, just under half of internet users perceive that all rewards programs are alike, according to a 2015 eMarketer survey. The key to success, then, is to differentiate your business from the crowd. If you can offer your customers something unique and valuable beyond the usual discount, chances are they’ll be more likely to stick with your brand. Here’s some inspiration from companies who get it.

Virgin: Reward more purchases with more benefits.

That’s not to say you need to get rid of discounts entirely. In fact, nothing could be further from the truth. Customers still love a good discount. The goal is to be creative in terms of the loyalty perks you offer. Take the Virgin Atlantic Flying Club, for example. As part of its loyalty program, the airline allows members to earn miles and tier points. Members are inducted at the Club Red tier, from which they can move up to Club Silver and then Club Gold. Here, it’s not just a discount. It’s status. And people respond to feeling important, elite. Still, even where the rewards themselves are concerned, Virgin is motivating loyalty customers with some pretty attractive offers. At the Club Red tier, members earn flight miles and receive discounts on rental cars, airport parking, hotels and holiday flights. But as members rise in tiers, they get even more. At the Club Silver tier, members earn 50 percent more points on flights, access to expedited check-in, and priority standby seating. And once they reach the top, Club Gold members receive double miles, priority boarding and access to exclusive clubhouses where they can get a drink or a massage before their flight. Now that’s some serious incentive to keep coming back for more. Discounts are still part of the equation – but they are designed with innovation and personal value in mind, elevating them to more than just savings.

Amazon Prime: Pay upfront and become a VIP.

What if your customers only had to pay a one-time upfront fee to get a year’s worth of substantial benefits? It may not sound like the smartest business idea at first glance. But take a closer look. Amazon Prime users pay a nominal $99 a year to gain free, two-day shipping on millions of products with no minimum purchase. And that’s just one benefit of going Prime. It’s true that Amazon loses $1-2 billion a year on Prime. This comes as no surprise given the incredible value the program offers. But get this: Amazon makes up for its losses in markedly higher transaction frequency. Specifically, Prime members spend an average of $1,500 a year on Amazon.com, compared with $625 spent by non-Prime users, a ccording to a 2015 report from Consumer Intelligence Research Partners.

Patagonia: Cater to customer values.

Sometimes, the draw for consumers isn’t saving money or getting a great deal. The eco-friendly outdoor clothing company Patagonia figured this out back in 2011, when it partnered with eBay to launch its Common Threads Initiative: a program that allows customers to resell their used Patagonia clothing via the company’s website. Why is this program important to customers? And how does it benefit Patagonia? The company’s brand embraces environmental and social responsibility, so it was only fitting that they create a platform for essentially recycling old clothing rather than merely throwing it away. The Common Threads Initiative helps Patagonia build a memorable brand and fierce loyalty by offering its customers a cause that aligns with deep personal values. OK, so their customers get to make a little money, too. Everybody wins.

American Airlines: Gamify your loyalty program.

If you’re going to offer your customers a loyalty program, why not make it f un? After all, engagement is key to building a strong relationship with your customer. And what better way to achieve that goal than making a game of it. American Airlines had this very thing in mind when it created its AAdvantage Passport Challenge following its merger with USAirways. The goal: find a new way to engage customers as big changes were underway. Using a custom Facebook application, American Airlines created a virtual passport to increase brand awareness while offering members a chance to earn bonus points. Customers earned these rewards through a variety of game-like activities, from answering trivia questions to tracking travel through a personalized dashboard. In the end, participants earned more than 70 percent more stamps than expected – and the airline saw a ROI of more than 500 percent. The takeaway: people like games.

Stand out from the crowd.

Your approach to your customer loyalty program should align with your overall marketing approach. Effective branding is about standing out, not blending it. Being memorable is key. To this end, keep in mind that loyalty programs are no longer a novelty. That means that yesterday’s strategies won’t work moving forward, so look for ways to rise above the noise, setting yourself apart from the cloying drone of countless other cookie-cutter programs.

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Intelligent Design: Transform Your Website into a Sales Engine with Machine Learning

Machine learning: The phrase evokes images of computers playing chess or IBM’s Watson destroying two legendary Jeopardy! champions in a three-day tournament. The truth is, though, machine learning is no longer a novelty; it’s now an integral part of our daily lives. Every time you receive a product recommendation from Amazon, your email server weeds out spam before it reaches your inbox or you enjoy a playlist on Pandora, you’re seeing machine learning in action. In a nutshell, machine learning is the science of training computers to recognize data patterns and make adjustments automatically when those patterns change. While on the surface this may not sound very exciting, nothing could be further from the truth. In fact, machine learning is the key to transforming your website into a lean, mean selling machine.

Understanding machine learning in 100 words or less

Machine learning uses algorithms to build models from data; as more data is collected, the algorithms are “trained” to adapt to changes. There are two ways in which machine learning can be implemented: supervised and unsupervised. Supervised learning algorithms are used to create models that establish relationships between types of data — the relationship between purchase data and user clickstream data, for example. Unsupervised learning uses algorithms to gain insights into customer behaviors and preferences by looking for patterns within the data. Both of these methodologies are designed to make marketing and e-commerce more exact, more personal and more profitable.

Putting machine learning to work

Netflix, Pandora and Amazon are all familiar examples of machine learning in action. All three use recommender systems powered by complex algorithms. These systems collect data about your browsing activities, past selections and any ratings or reviews you may have provided. Then they segment you into clusters with other customers who have demonstrated similar interests or behaviors and use this data to suggest items that might appeal to you based on the browsing and purchasing habits of these other customers. You see this on Netflix as the category titled “Because you watched...” and on Amazon as “Customers who viewed this also viewed...” To gain a deeper understanding of how these algorithms work, let’s take a closer look at Amazon. To Amazon, you are a very long row of numbers in a massive table of data. Your row represents everything you’ve looked at, clicked on, purchased (or, equally as important, not purchased) or reviewed on the site. The other rows in this gargantuan table encompass the same thing for the millions of other customers who shop on Amazon. With every click, visit and purchase, more data is added to your row, which allows Amazon to constantly mold and shape the products it recommends to you and the special offers you receive based on an ever-evolving stream of information about you that is being collected and stored. Another innovative example is True Fit, a retail software start-up that is on a mission to apply data analytics to increase customer confidence in online clothing purchases while decreasing the number of returns for e-railers. Well-known fashion retailers, including Nordstrom, Macy’s and Guess, have implemented True Fit’s algorithms on their e-commerce sites. When customers shop on these sites, they’re asked to create a profile that includes their height, weight and perhaps most importantly, the size and brand of their favorite piece of clothing. Using that data, True Fit is able to recommend the correct size for a specific brand and article of clothing. Even more importantly, as customers continue to use the True Fit system, it learns more about their personal style and preferences and steers them toward purchases they’ll be more likely to keep and enjoy rather than return.

How machine learning drives smarter marketing

You don’t need the resources of major e-commerce giants like Amazon or Netflix to take advantage of machine learning to to improve your e-commerce site and your online marketing efforts. By enhancing your existing site with systems that allow you to create a virtual marketing intelligence brain, you can create a more personalized – and therefore higher quality – shopping experience for your customers. By establishing this type of marketing intelligence ecosystem, you can mine the data provided by customers every time they visit your site to answer vital questions that will help you fine-tune your site and your online marketing strategy – questions like these:

• How likely is a given website visitor to convert?
• What behaviors characterize customers who are likely to buy?
• What behaviors characterize customers who are likely not to buy?
• How can new visitors be identified as high-potential long-term customers?
• Which type of web traffic has the most value?
• Which products or services appeal most to a given segment of customers?
• Given the contents of a particular customer’s shopping cart, which additional products are high-potential recommendations?
• How can website visits be optimized to provide the best possible experience for each individual customer?

Making it personal

The final question in the list above is one that deserves special notice because of the staggering potential for using machine learning to create a more personalized shopping experience – one of the key drivers for increasing online sales. Not only can the data collected via such marketing intelligence ecosystems be used to drive recommender systems, it can also be used to create personalized advertising based on market segments — or even individual profiles — that can be distributed across a variety of desktop, mobile and social platforms. This type of advertising can be tailored to any number of personal preferences and demographic information, including age, marital status, location, lifestyle choices, typical purchases, brand preferences and so on. Ads can be focused to such a granular level that they reflect specific colors a given customer prefers, and their individual purchase drivers, such as status or cost-effectiveness. Another exciting aspect of machine learning-based personalization is the development of individual customer profiles. You can even combine online and offline customer data to create a more complete picture of a given user. Types of data included in this profile might include online and in-store purchases, membership and activity in rewards programs, product ratings and clothing sizes. Just imagine how much more powerful your marketing efforts could be if you were armed with this level of information. One of the most important aspects of a successful marketing intelligence ecosystem is how data mined from customer activities is combined with sound business rules in order to make smart recommendations that are well received by customers and that do not compromise their trust in your brand. For example, most people who walk into a supermarket like bananas and will often buy some. So shouldn’t the recommender simply recommend bananas to every customer? No – because it wouldn’t help the customer, and it wouldn’t increase banana sales. So a smart supermarket recommender would always include a rule to exclude recommending bananas. At the other end of the spectrum, the recommender shouldn’t push high-margin items just because it’s beneficial to the seller’s bottom line. It’s like going to a restaurant where the server steers you toward a particular high-dollar entree. Is it really his favorite? Or did the chef urge the staff to push the dish because it comes with a side order of premium mark-up? To build trust, the best recommender systems strive for some degree of transparency by giving customers clues as to why a particular item was recommended and letting them adjust their profile if they don’t like the recommendations they’re receiving.

Science fact, not fiction

Machine learning can give your business a serious competitive edge by opening the door new opportunities in the marketplace. It can help you personalize and improve your customer experience dramatically and thereby drive sales and revenues. Creatives and developers alike are rapidly pioneering new and innovative ways for marketers to use machine learning — and the future of marketing built on these ideas has seemingly endless possibilities.

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SPF for Your Website: Three Simple Steps to Protect Your Online Presence

As the days get longer and the mercury rises, we’re reminded yet again of the importance of remaining vigilant when it comes to applying sunscreen to protect ourselves from summer’s damaging rays. It’s a simple yet necessary precaution that if neglected has both short-term consequences – the painful agony of sunburn – and long-term ramifications – skin damage and increased risk of skin cancer. The same holds true for our websites. If we are not proactive in taking the necessary precautions to keep our online presence safe, problems will inevitably arise. Here are three simple measures you can take to apply SPF to your website that will safeguard the integrity not only of your brand’s online presence but its reputation as well:

(S)ecure your site against SQL injections.

Websites that feature data-driven applications can be vulnerable to attacks known as SQL injections, whereby malicious code is added to an entry field, then run and executed. These attacks exploit security vulnerabilities in problematic code, attacking your site’s database and performing any number of actions, from adding unapproved content to your public-facing site to allowing the hacker to download your entire database. This is a prime example of why rigorous testing is absolutely critical prior to launch. If your site is already up and running, consult with your web team to make sure that it has undergone thorough testing and is protected against such hacks. If you want to take additional precautionary measures, there are also security companies that specialize in detecting these types of website and database vulnerabilities, and they can provide you with a security audit.

(P)rotect your domain name.

It’s common sense that you must pay to acquire the domain name where your business will reside online. However, it’s important to remember that you have to continue to pay in order to retain the rights to use that domain name. Essentially, when you purchase your domain name, you’re not buying it outright. Rather, you’re renting that name for a specified period of time. Most registrars (Network Solutions, GoDaddy, Register.com, etc.) allow you to secure a name for anywhere from 12 months to 99 years. If you allow your registration to lapse, however, the domain name becomes available for purchase again and is open to the public for anyone to acquire. Bear in mind that there are actually companies that profit handsomely from business owners who neglect their domain registrations. They monitor domains that are nearing expiration, taking ownership of them the moment they become available. If you have the misfortune of having your domain acquired by one of these companies, usually you can negotiate having ownership transferred back to you, but it will cost you dearly. Unfortunately, while this is a shady practice, it is not illegal. If you allow your domain name to expire, it is fair game for anyone to register it – including these types of companies. Before your domain name expires, your registrar will likely send you many notices prompting you to renew. I start getting domain name renewal notices six months or more before the scheduled expiration date, and as that date gets closer, the notices start coming more and more frequently. Still, despite this barrage of email notifications, there are still many companies that are unaware that their expiration date is approaching, and they either lose their domain name altogether or are forced to pay a king’s ransom to get it back. Often when this situation occurs, it is because the person who initially completed the registration process for the domain name is no longer with the company, and therefore the email address they used to register the name is no longer valid, so the multitude of email notices go unreceived. The company innocently thinks they are protected until one day they stop receiving emails (yes, your email is tied into your domain name), or a customer mentions that they tried to go to the site, and it was simply gone. Even though there is a grace period after a domain has lapsed that allows you to reclaim your ownership before it becomes open to the public, the lapse isn’t always discovered in time to take advantage of this safety net. To prevent this, it is critically important to keep the contact information for your domain registration up to date. Either contact your registrar directly or speak with your web team to make sure you know when each of the domain names you own needs to be renewed, and double-check to ensure that the contact information for your account is valid.

(F)ortify your forms.

Web forms are a staple of doing business online. In fact, rare is the site that doesn’t include a form of some sort that allows the user to input information to be transmitted to the site’s owner, whether its purpose is to make a contact inquiry, sign up for a mailing list, complete a purchase, apply for employment, etc. As anyone who has a form on their site can attest, however, not all submissions received via these forms are legitimate. This is called robot spam, which is created by spammers who write programs that send out spambots to indiscriminately fill out any and all different types of forms on the Web, looking for entryways to expose a site’s security vulnerabilities (see SQL injections above). If you find your inbox filling up with indecipherable junk submissions, it’s these bots who are to blame. To combat these spambots, you can install a CAPTCHA system on your form, which generates an image with a random combination of numbers and letters that the user must enter in order to submit the form. The spambots can't interpret these CAPTCHA images, so therefore they can’t complete the process of sending the form. While there is legitimate debate as to whether or not CAPTCHA is the most effective way to prevent bogus submissions, it still remains the most popular solution for web form security. However, the reason it’s important to block these bots goes beyond eliminating the annoyance of a cluttered inbox. A few months ago, my company decided to remove the CAPTCHA requirement from our contact form. We knew we would get a flood of spam submissions, but we decided we could deal with a little extra hassle on our end in exchange for reducing the inconvenience to legitimate users of having to interpret those squiggly letters in order to simply get in touch with us. As expected, the amount of spam we received increased dramatically, but it was still manageable. Then, all of a sudden, we stopped receiving any submissions at all. We also began seeing some of our emails to other people bounce back. What we discovered was that our web domain (which is where our emails originate from) had been blacklisted as spam by Microsoft (which is what powers our email platform). Apparently, all the bogus submissions from our website (which resides on our domain) to our email caused Microsoft to identify us as spammers. This is because our form submissions came from an email address associated with our own domain name (many web forms are configured this way). Obviously, we were not the ones generating the spam, but this strange series of coincidences conspired to get us blacklisted! Fortunately, it was an easy process to get our domain removed from the blacklist, and we quickly re-installed the CAPTCHA system on our contact form, but we certainly learned an important lesson about security and spambots along the way. If you allow those bogus entries to make it through, there is a risk that you, too, could find yourself blacklisted and unable to send email to some of your most important contacts.

Seize the day and stay safe.

Since summer is vacation season for many of us, business tends to slow down slightly as our clients and colleagues enjoy much-deserved time off. That makes this the perfect time to seize the opportunity to apply these S-P-F practices today to ensure that your online presence is well protected all year long.

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