If you run a business or a marketing and promotions program based on a loyalty card, rewards card, points card, advantage card, club card, credit card or debit card then very soon (if haven’t already) you’ll be thinking about the benefits of migrating your customers to New Plastic.

New Plastic? You guessed it, the Mobile Phone.

Now your “New Plastic” strategy could take shape in one of two ways.

• You could just build lots of Mobile Apps and distribute them to all your members (Thereby adding to the costs of managing the program), or
• You could turn your Loyalty Program Cost Center into a Profit Center by offering your customers the opportunity to sign up to your branded mobile phone network.

Interested in Plan B? Let’s show you how and why you should be thinking about becoming a Mobile Virtual Network Operator (MVNO).

First, let’s deal with the obvious question. What is an MVNO?

If you take a look at the diagram of the MobCon value chain below you will see a group of activities called Service Provision (i.e. Customer Care, Billing and Marketing). In this MVNO model a third-party steps in and takes over these functions from Telco and “owns” the retail customer relationship.

What this means is you own the customer and the Telco owns the transport system. You provide your customers with mobile phones and plug them into the Telco’s network. You buy wholesale air time and then bill the customer based on the network data records provided by the Telco.

Sounds simple in theory? Obviously it takes some effort to implement but as you will see much later on the financial benefits can make it worth the effort.

Why would the Telco allow this to happen?

Historically the Telecoms industry has struggled with 3 key aspects of customer relationship management.

Firstly their customer acquisition costs are very high. Secondly they struggle to retain these customers. Customer loyalty is poor and consequently the industry suffers from a high level of churn. Then there is the ongoing problem of billing.

The final problem the telcos face is the Voice problem. Essentially they need to increase ARPU on Data to replace the trend downwards in Voice ARPU.

In a nutshell Telcos are very good at building, maintaining and managing the “Dumb Pipes”. What they are not very good at is Customer Relationship Management.

The reality is any organisation operating an efficient and successful loyalty program can address all these issues of Customer Relationship management more effectively than the Telcos.

To begin with the Loyalty program operator has already resolved the customer acquisition and retention problem. They also have an effective customer service and billing platform. The challenge for the operator of the loyalty program is to add value to that customer loyalty by providing them with goods and services which will help keep the customer sticky and more profitable.

Mobile phones add value, deliver a new revenue stream and provide the perfect platform for mobile communications and mobile web commerce applications.

Properly implemented and managed, the SmartPhone not only becomes the perfect customer loyalty platform it can also add tens, if not hundreds, of millions of dollars to your bottom line.

The MVNO model is not for everyone. There have been some well documented disasters over the past 5 years. The most notable being Disney and ESPN. (Om Malik’s piece from 2005 A MVNO Train Wreck Coming?)

The most successful global brand in the MVNO space is of course Virgin. In fact Virgin have been so successful in the US that their Telco has just bought them out. (See Sprint buys out Virgin’s US MVNO business for or around $483m).

The other success story is of course Britain’s Tesco. 2.25% of this national grocery retailer’s profit  is now generated by its MVNO business Tesco Telecoms.  Today they are seeking to significantly expand their market reach with their investor announcement of plans to double their profits in the sector by pushing into traditional sectors of the Telco market like broadband and home phones (e.g See the Telegraph’s Tesco plans assault on broadband market, The Times Tesco links with Cable & Wireless in broadband and home phones push and UK Compare Broadband’s Tesco aims to be the new BT) and moving into the premium iPhone market (See TechCrunch’s Mike Butcher: The iPhone comes to Tesco — will a price war follow?)

All this success is prompting retailers around the globe to take a good look at the MNVO model. (See Woolworths (Australia) Launches Its Own Mobile Network and Walmart launching own pre-paid cell plans)

Want to see who is getting it right today? Then start your search here at TelecomPaper.Com . Here you will find an up to date list of the MVNO’s and their Telco partners operating in every market around the globe.

So how do you know if you can get the model right? The simple answer is this.

The EGO:ID of CRM or How to profit from managing the customer lifecycle

If you have the EGO:ID of Customer Relationship Management in place then you are ready to profit from introducing a MNVO loyalty program (See Customers for life?).

The quickest and biggest losers so far in the MVNO market (e.g Disney and ESPN) made a fundamental error of judgement. They thought that content was the hook to build a successful MNVO business. As Virgin proved they were wrong. What you need to succeed is great Customer Relationship Management. Get that right and the rest is relatively easy.

The primacy of CRM in the MVNO Business Model is the reason why the MVNO model is not the answer to the future of Newspaper or Web Portals. Yahoo!, MSN, The New York Times and News Corp may have enormous online traffic but they do not have a relationship intimacy with their customers in the same way that a retailer, bank, hotel chain, rental car or airline may have.

I guess you could say they have followers rather than customers. Sadly,the Disney and ESPN experience proves that these online followers do not easily translate into profitable mobile phone customers.

It could be the stagnant economy or just a sign of the times, but customer loyalty programs and rewards are not only popping up everywhere, but they are evolving, too. In general, I try to keep my shopping to a minimum, just the necessities. Yet when I do spend money, I have now been conditioned to expect it to do something for me.  There are numerous customer rewards programs out there, but let me write about four that I feel are excellent because they are easy to utilize and a good deal to boot.

1.  Winn Dixie / Shell Fuelperks.  I have a Winn Dixie loyalty card, which I always use when I shop there.  However, it is my second choice destination for groceries; I usually go to Publix for their selection and better produce. I must admit though, my thoughts are changing as this gas discount perk is huge for me. Winn Dixie has a ways to go to meet my vegetarian wife’s food options, but if I can do a little more shopping at Winn Dixie (especially with the renovated stores—much better deli and produce) and a little less at Publix, which has no loyalty program, that would be fine with me. Two trips to Winn Dixie and I accrued a 40 cent-per-gallon price reduction in gas. Grocery shopping and gas fill ups are also roughly correlated on a frequency standpoint for me, so I can grocery shop and then immediately go fill up my car for cheap.

2. Southwest Airlines.  It is an oldie, but a goodie. Long ago, before LUV even arrived in Baltimore, I flew USAir’s Metrojet—and loved it.  Cheap direct flights from BWI to JAX, where my then-girlfriend, now-wife (TGNW) was. I think they had something going like ‘fly six earn a seventh free’.  Southwest’s program is similar and simple.  You fly to earn credits; credits earn you free flights.  Sixteen credits equals one free roundtrip; no points, no tiering.  Affiliate partners have complicated things, but have also allowed flyers to add a half-point here and there—even double or triple depending on the offer.  SWA’s website is easy to understand where you are with your points, and they are easy to redeem. On top of that, they are my favorite airline, even with the old cattle call system.

3. USAA Platinum Cash Rewards MasterCard.  Call me old fashioned, but I like getting cold, hard cash back. Any shopping method that promises this will automatically get my attention. But not all cash rewards programs are created equally. I have an American Express card with similar cash rewards, but the spending structure is set up so that you have to spend serious dollars to crack the high return threshold of 1% cash back.  For instance, you might get .25% back on the first $5k spent, .5% back on the next $5k and 1% back on all spending above $10k.  I never give my plastic that kind of workout, so I never see the big returns.  USAA’s card, even with its most recent adjustment to its similarly-tiered spending arrangement, offers more cash back while spending less…and I like that.

4.  Staples Rewards Ink Cartridge Return.  Ever since the birth of our daughter, Quinn, and my wife’s budding Etsy art endeavor  (http://www.etsy.com/profile.php?user_id=5545525), we have been using our HP printer like mad. Thus, we plow through ink cartridges like crazy, and those run $12 a pop unless you buy them in a set—cha-ching. No sooner had I lamented the frequency of spent ink cartridges hitting the trash, than Staples started this cartridge return program.  I believe it is only for Rewards card customers and I think Staples also has other return programs. In this case, if you return an ink cartridge, you get a $3 rebate for each one, and you can make returns with no purchase required. The only negative is that you have to wait for a rebate check to be cut from the mother office, but they do it once a month after tallying all your returns for that month, and the checks are good for about 60 days. I routinely get checks for between $9 and $15, so it definitely keeps me coming back to buy more ink there.

On the other hand, it always irritates me when you sign up for something hoping for a benefit and you get nothing. One program I think is a total waste up to this point is my Petsmart Pet Perks card. I think I signed up because the cashier asked me, but I hardly ever see even an opportunity to use it.  I scan it every time I buy my dog and bird food, probably $60 every ten weeks, so I am not the most frequent customer but no stranger either, and am not sure if I ever received one discount in over two years. I have never had a coupon mailed to me, no special sales, and rarely see anything in the aisles I frequent that offer a discount with the card. The one time my dog’s favorite food was discounted with the card, they were sold out.  I was able to get a similar discount with a smaller bag thanks to the store manager, but I shop for six or eight weeks’ supply, not two.  I went back five days later after restocking to load up and the discount was off, only to be told they typically last through the end of the month—and it was the 30th of September, so what gives?

Rewards programs should not be a crutch counted on to meet your budget; however, it is not unreasonable to expect to be able to accrue some long-term benefits with store loyalty.  Be wise when snooping around for benefits programs and guard your personal information. I eschew affinity credit cards because credit cards are a double-edged sword.  I shop with the idea that I am going to buy it anyway, so I may as well get something back when possible.  Good luck finding your just rewards.

We love reward cards — at least 82 percent of us, according to new research. The problem is we’re being bombarded with them — it’s estimated there are now around 200,000 loyalty programs in Australia.

Find which loyalty programs are the best by going to:

http://aca.ninemsn.com.au/blog.aspx?blogentryid=446858&showcomments=true

MasterCard has announced the availability of M/Chip Advance, a payment platform takes traditional debit, credit and prepaid chip cards to the next level by advancing payment functionality, facilitating deployment of contactless applications and integrating information needed for business applications such as transit and loyalty. The result according to MasterCard: “the potential to deliver versatile, multi-functional payment capabilities to consumers on one payment card.”

Frequent buyer programs are frequently misdefined as loyalty programs.   Zealotry is not about “frequency of purchase”.  Your best Zealots may not be heavy spenders or most frequent customers.  But, they remain extremely valuable in terms of referral.   True loyalty is earned by the brand, not bought by frequency of purchase.  Read on …

From Reveries.com

Let’s just get this straight once and for all: There is no such thing as brand loyalty. Each of us likes certain brands and may even love them. We may buy them most of the time, or perhaps even every time. But the idea that we have a true bond with any brand, like the kind of commitment we have in real life with our friends and family, is a farce. This doesn’t mean we shouldn’t try to create that kind of loyalty; most of us tell ourselves that’s the end game and it’s always important to aim high.

What it does mean is that we should take a harder look at how we go about creating what we call loyalty. We need to admit that coupons, discounts, points and prizes are just beanbags. We ought to spend more time thinking about the stuff that really matters to people, and serve that up each and every day.

That means products and services that really and truly solve problems and help people live happier lives. Providing a helping hand when someone really needs it, and smiling because we truly mean it. It’s not because the customer is always right (nobody’s perfect). It’s because it’s up to us to make it right. We may not get the same kind of loyalty we enjoy with our family and friends, but we’ll have more fun, and so will everyone else. Loyalty is what we make it. Your thoughts? ~ Tim Manners, editor.

“Loyalty card programs have simple marketing concepts at their core: providing incentive and motivation to your existing customer base to do more business and to provide them with something of added value.” – http://virtualcorporation.co.za/drive-more-business-with-loyalty-cards

Sprinkle that with a little Frame Action magic… Mmmm that’s good.

Contractors and other industry professionals weigh factors such as price, reputation and availability when purchasing building products and supplies for commercial or residential jobs. When all things are relatively equal in the buyer’s mind, an incentive can swing a product purchase decision one way versus another. But buyers report that the incentives have to be worth their while and that obtaining—and keeping—their loyalty can be a tricky balance of offering enough value to tip the scales in their favor.

James Nowakowski, president of Accountability Information Management Inc., a Palatine, Ill., firm that develops and operates various types of incentive programs for manufacturers, says that many contractors find that the effort to enroll and qualify products for these programs is worth the trouble as long as the pay-off is substantial and realistic to attain. “Companies need to be committed to their customers on all levels and that includes customer incentive programs,” says Nowakowski. “It’s important to have strong customer relationships, and it all comes down to building loyalty and maintaining trust. Rewarding customers for their faithfulness is part of that relationship.”

The president of a Cincinnati-area commercial contracting firm with more than 100 employees recounts how he knew nothing about incentive programs until he placed a large order with a manufacturer’s representative several years ago. The salesman informed him that his purchase would qualify for thousands of points in the manufacturer’s loyalty rewards program, and the president discovered how quickly the points added up. “Once I saw the points collecting, I kept doing it,” he says. “It got to be part of a game.”

The contracting firm president says an incentive program itself isn’t enough to warrant purchasing from one manufacturer instead of another; good service and product quality are most important to him. But the incentive program is a “motivator” to specify that manufacturer’s products, as long as the prizes are worthwhile. Trading earned points for money or a catalog item, such as a laptop computer, sports tickets or a home entertainment system, is much more persuasive than promotional trinkets.

Nowakowski says what’s interesting is how participants who essentially “lock in” their loyalty to win these prizes usually have higher opinions of these manufacturers. Research conducted by Accountability has found that participants rate the manufacturer more favorably on factors such as customer service, dependability and product performance. “This loyalty translates into much greater value for the manufacturer over the long run than simply beating the competition on a single job bid,” he says.

ACCOUNTABILITY INFORMATION MANAGEMENT INC., located in Palatine, Illinois, is a marketing research and marketing communications company with extensive knowledge in branding strategies and print advertising behavior through database management and technologies. Clients of Accountability include magazine publishers, associations, and public and private companies in manufacturing, construction and other industrial markets.

For more information on designing and administering a market-specific program, please contact Sue Garrison, Interline Creative Group, 847-358-4848, sueg@interlinegroup.com.

In July, we wrote about Best Buy’s Reward Zone loyalty program, showing how it fit into our strategies for double/triple dipping on points and bonuses when shopping.  As of the end of this week, however, the Reward Zone program may no longer be that great of a deal.

On October 31, 2009, Reward Zone rules will change so that any points accumulated through the program will expire at the end of the calendar year and members have to make a purchase every 12 months to maintain their account.  So, while it will still be the case that Reward Zone members receive one point for every dollar spent at Best Buy, and every 250 points can be exchanged for $5 in store credit (effectively a 2% discount), this program will no longer be attractive to those who visit Best Buy only sporadically and don’t make big-ticket purchases.  Of course, Reward Zone is a loyalty program and should focus on its larger, most frequent customers.  Nonetheless, even those customers will likely lose out, since, after the changes, any points over a multiple of 250 will be lost at the end of the year.  That is, if a loyal customer spent $900 at Best Buy one year, for example, she will receive $15 in store credit and the remaining 150 points will be forfeited.

Only the most loyal customers are protected from that.  You can qualify as a Premier Silver member by spending $2,500 within a calendar year at Best Buy, and your membership is carried over through the following year.  Premier Silver members earn an extra quarter-point on every purchase, and their points roll over each calendar year they remain qualified.

Reward Zone is also still a good deal for gamers.  If you enroll your Reward Zone card into the “Gamers Club,” you will get 500 bonus points for every $150 you spend on videogames, computer games, and videogame accessories at Best Buy, on top of the regular points you earn.  If you spend $300 on eligible purchases, for instance, you will receive 300 regular points plus 1000 bonus points, or $5 (with 50 points remaining) plus $20 – essentially an 8% discount.

With these upcoming changes, it is likely that Reward Zone will loose its attractiveness to most people, making it similar to the Borders Rewards, where the principal membership perks are the coupons received rather than the points system.  But unlike Borders, which sends new coupons by email on an almost weekly basis, Best Buy’s Reward Zone coupons only come every few months, and are usually a 10% discount on one item from a very restricted list.

My advice for Best Buy’s less-loyal shoppers: Create or keep your Reward Zone membership just in case you make $250 or more in purchases within a calendar year or you receive a useful coupon; but if you don’t, don’t be disappointed.  Reward Zone is clearly being redesigned for Best Buy’s most loyal customers and gamers.

The good news is that people are joining loyalty programs in pretty big numbers, seeking added value in a tough economy. The bad news is that activity remains flat with two years ago. The take away: marketers need to shift focus from growing membership to increasing the value of the programs.

Membership in U.S. loyalty rewards programs jumped 24% to 1.8 billion, from 1.3 billion two years ago, according to the 2009 Colloquy Loyalty Census.

“Given the bursting of the credit bubble, the recession and pressure to control program costs, loyalty marketers must turn to growing program value, not the size of their membership base,” Colloquy Editorial Director Rick Ferguson said.

So what if you could go to Google, Bing or Yahoo and type in “computers” and because you are part of a particular loyalty program, a 15% off coupon for Dell appeared at the top of the search results. Wouldn’t that ad value? We think so.

Over the last couple of months we have been making significant progress in developing context-aware applications that create value and trust within existing communities. Where we have focused most of our attention is on loyalty programs. They are just a natural fit for our technology; Not to mention they appeal to a wide range of businesses wanting to build their brand and provide something of value to their customers in a down economy.

Forrester, a leading research company, recently published an article on the subject of loyalty programs. Here is a quote that stood out to me…

One-third of consumers said that they tend to buy more goods from retailers when they are part of their loyalty programs. In a recession, marketers should reinforce this virtuous circle.

In future blog posts we’ll discuss what it means to build a loyalty program with Frame Action.

Borders and Barnes & Noble bookstores are apparently morphing into clubs by taking their loyalty programs a bit too seriously.   I have twice now been taken aback at the cashier when I was asked, “Are you a member?”   A member of a store?  “No,” I wanted to reply, “I am a customer and this is a store.”   Something seems very wrong about a store calling its customers “members.”   Although the clerks were referring to their respective store’s loyalty program, the clerks’ exclusivist tone of voice suggests that something more is going on here than a simple discount program.   By the way, the “loyalty” programs are geared to the customer being loyal to the store, rather than the store to the customer.  A business does not recognize that sort of obligation; it simply does not compute.  I want to point to what may lie behind the attitude that is in the reduction of customers to members (as well in the asymetric approach to loyalty). 

Foremostly, the characterization of customers as “members” and “non-members” stresses an insider-outsider mentality that is otherwise salient at country clubs and ivy league universities.   Visiting the university of wisconsin, I was told by a staff, “the people here should feel it is a privilege to be on the campus.”  How arrogant, I thought; the State university is a public school funded by tax-dollers (at least in part).  The staff person struck me as fake in trying to be more than he (and his school) was.  I had that same sense of fakeness when I was asked as a customer whether I was a member of the bookstore.  

In general terms, the “members preferred” attitude of the sales clerks I sensed a presumptuousness based on fakeness.  Whereas members of a club vote on the club’s policy, customers vote only with our wallets and purses; the store is not a partnership, and if it were, I doubt that the customers would be the members.  

At a still more general level, I have noticed that business managers sometimes have the nasty habit of misappropriating terms and ignoring the rather blatant ill-fit.  For example, the former Lehman Bros exec who penned A Collosal Failure of Common Sense describes the CEO as having had “generals.”   Apparently bank VPs tell their subordinates to shoot guns.   Why a business person would want to make his or her environment resonate with the verbal trappings of actual war is beyond me.  Perhaps it gives the executives a vaunted sense of the significant of their little corporate battles…as if the courage needed in the boardroom even remotely approaches that which is needed on the battlefield when one’s life (and those of others) is on the line.   Even Disney, a company geared to toys and entertainment, is descibed as “getting more aggressive” in creating a “new look” for its stores.  If creating a “new experience” with toys is aptly described in terms of agression, I’m missing something basic. 

The extra-appropriating here in in terms of over-reaching with terms.   That the managers and clerks could become so inured to their over-reaching that they don’t even realize it when a customer looks at them with a blank stare suggests just how feckless the underlying psychology is.  From such an attitude, the manager or clerk would be apt to conveniently conclude that the customer is somehow “confused” or worse.  That the manager or clerk could be using the term incorrectly (substituting member for customer) is typically dismissed. 

Although this particular case study may seem insignificant, I suggest that it shows a mentality that is endemic in modern American business.  At the very least, the use of language evinces a sordid attitude that is fast becoming “normalized” as it becomes increasingly ubiquitous.  How about we stop this in the bud and answer the clerk, “No, I’m not a member; I’m a customer.”  Such directness would make transparent the over-stepping that may now be so common that it is not even recognized.

For the Disney quotes in the NYT (10/13/09), see:  http://www.nytimes.com/2009/10/13/business/media/13disney.html?_r=1&hpw

When I was booking a trip to New Jersey this morning, I realized since the beginning of August I have earned  over $30 toward my Health Savings Account through a program called My HSA Rewards, just booking my travel.  If you follow this blog, you know that I am an advocate of that program which helps me  put more money into my Health Savings Account by shopping for the normal things I purchase every day.  

Basically I log in to the My HSA Rewards website, go to the shopping tab, and in the case of my New Jersey trip, click on the link to Priceline and book my trip.  The folks at My HSA Rewards give me 2%  for Priceline purchases which goes into my My HSA Rewards account.  After I  earn $50 into my account I can then transfer it into my Health Savings Account.

But here’s why I am babbling on about this.  Just in the past few weeks, My HSA Rewards has  added a lot of new ways to earn more HSA deposits.  And today as I was booking my travel, I counted up the ways to earn in just the travel category, and it added up to 38 different ways.  They are affiliated with a lot of the online travel sites including Priceline, Expedia, Orbitz and others; airlines like Delta, United and Virgin; Hotels , rental cars and luggage, you name it.  So now there are even more ways for me to earn when I book my travel.  And that’s on top of the hundreds of other ways to shop and earn.  The amount of the awards vary by merchant with some %’s back even in the double digits 

Excluding whatever I earned today from my Priceline purchase and another purchase I made from Overstock.com, to date I have managed to earn over $70 which ultimately will land in my health savings account.   I like that.  That’s $70 that won’t pinch my pocket when I need to use it for my family’s health care.

How competitive are credit card rewards today? A recent report showed that consumers search online for the best credit card rewards 514,610 times a month, according to Orange Soda, an online search marketing company based in American Fork, Utah.

Add 8,200 searches made specifically for debit rewards and it becomes evident that not only are payment card rewards in high demand, they’re expected. Consumers are clearly shopping to find the best rewards before they put a card in their wallets.

This level of demand is coming as many financial institutions feel pushed to lower the cost of their cardholder rewards programs. The recession is taking a toll, interchange fee pressures are mounting, and balance sheets are increasingly weighed down with liabilities from existing points-based programs.

Facing lower margins, many of these organizations are seeking more affordable ways to attract and keep customers while building card preference.

Enter the merchant-funded program, which has flourished in this environment. In this model, a network of merchants offers exclusive discounts or a cash-back amount to the credit union’s member cardholders.

Read more . . .

Almost every company has felt the impact of this economy, and we have seen it transform our customers. As we face the reality of double-digit unemployment, the largest loss in personal wealth, savings, retirement since the great depression and high consumer debt (an average of $10,482 in credit card debt per household), it is clear the consumer mindset has shifted into survival mode. 

This change demands that businesses, for their own survival, must shift as well. Consumers overall are increasingly disengaged and focusing primarily on the MUST haves for their family vs. many of the products and services each of us may provide in the market.  In an attempt to keep these customers engaged and drive more loyalty/profitability, loyalty programs are a logical strategy. 

Some attempts are more successful in this effort than others.   An essential component of those programs that do succeed in this environment is the ability to tie a company’s given products and services to these same fundamental needs that have recently become the main concern of households. Put simply, consumers want to save, and are increasingly drawn to loyalty programs that help them do that. In fact, there has even been a 25% growth in loyalty membership between 2006 and 2008. Among financial institutions, retail checking and debit card rewards have seen a 77% increase.

If the economy has challenged the relevance of your primary offering, a successful loyalty program that delivers consumer savings can help you realign your proposition with the current consumer mindset. Put simply, consumers never stop wanting a good deal. They can feel overwhelmed by loyalty programs because so many don’t deliver true value (loyalty fatigue) but they won’t ever tire of actually saving money.

We have recently calculated the potential impact of such a program on money-conscious households at Access.  We found that our merchant-funded discount and rewards network, which emphasizes everyday, relevant discounts, could deliver $135 in savings a month on average to a household with the national median income of $45K. With this message, our clients have been able to better align with the changing needs of their customers.

We all want to be top of mind and top of wallet in the minds of the consumer. The key in the current economic climate is to put the consumer mindset in your favor with offerings that enhance the value of your existing products/services and effectively boost the bottom line for your customer on a daily basis, not only when they buy from you.  In turn, your business also maintains a healthy bottom line–even in difficult times.

Ramesh Patel, President born in Kenya and educated in London, brings to LesConcierges over 20 years’ experience in operations, sales and service delivery through a series of executive roles with top companies in a variety of international locations.Challenge Us with the Ordinary to the Extraordinary!
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No, not quite but at least it’s something on the table.  There are a variety of incentives to book an upcoming weekend stay in the Northeast or Midwest including the following:

• 999 bonus Starpoints
• Room upgrades
• Breakfast or parking for just $9.99

If you’ve got an upcoming trip in either the Northeast or Midwest, click here or on the picture and see what’s being offered at the hotels there.  Just remember you’ve got until September 9 to book and you’ve gotta stay by December 27, 2009.

Happy Labor Day!

Twenty-five years ago last October, the President of Ameritech, Bob Barnett, made the first commercial cell-phone connection by ringing up Alexander Graham Bell’s grandson on a DynaTAC handset that weighed 2.5 lbs and cost $3,995—a call that launched a $150B industry.

Yet, for another decade, the mobile phone was generally just seen in movies, and, unless you were a rock star or a member of the G7—the cell phone on your car dashboard was probably just a plastic gag to amuse the neighbors.  This evolved into the fabulous gray phone-brick that trickled down to the upper middle-class, and, well—the slick minicomputer in your pocket (that has never been more than 10 feet away from you since you bought it?)—that tells the rest of the story. 

The mobile phone has fed and fueled the demand for immediacy in a way that is only second to the internet.  It offers instant information, instant communication, instant solutions to our daily problems.  With mobile couponing (and next, complete mobile commerce), it can provide instant value—and in turn—instant loyalty.

I noticed on my drive to work recently that a local bike shop put up on their marquee a code I could text to receive exclusive discounts.  Merchants are seeing the power of this medium, as they know that from the moment I enter that code, a tie has been made.  When I am next in the market for parts or service or a new birthday bike for my kid—can you see me going to another shop?   Unlikely.  The bike shop just tied itself to one of my most essential and most-used possessions.

The company tied to the ubiquitous mobile phone essentially becomes tied to the mobile user. 

Things have come full circle.  As business became more technologically driven, we saw the business relationship grow less personal.  Now, as technology becomes increasingly individualized and profile-driven, we are seeing the ability to create even more individualized relationships with consumers than ever before.  From a loyalty and incentives standpoint, mobile is the perfect platform for immediacy and direct, personal contact—even if it is simply through the devices we now hold dear. 

I wonder what good old Alex Bell would think of that.

Looks like the US version of the latest SPG promo has been released in Europe, Africa, and the Middle East.  Now when you stay at over 100 participating properties in this region, you can earn 1,000 Starpoints per stay through this SPG promo called, “Get Closer to Paradise.” These Starpoints are eligible on stays between September 1 and November 30, 2009.

Here’s the web registration page, which you must complete if you want to receive the Starpoints: http://www.spgpromos.com/1000starpoints/?EM=Q309_MT_NAD

Now the only region of the world without an SPG promotion is Asia!  Well, travelers to that area will be well rewarded.  Looks like instead of bonus Starpoints they will receive free weekend nights for their stays.  That’s almost always worth more than Starpoints if you use them on the higher category properties like W, St. Regis, Luxury Collection, and even Sheratons and Westins in Asia.  For example, the Westin Bund Center in Shanghai at times has higher rates and Starpoints redemption thresholds than the St. Regis across the river.

A good piece on Mexico’s telecommunications sector can be found in the last issue of The Economist.  The industry blossomed with few smart regulations.  One of them, ”the calling party pays”, increased the traffic ninefold.  It is very simple: the caller pays for making a phone call, while the call is completely free for the receiver.   What really impressed me was the competition between two mobile services providers Telcel and Movistar.  Telcel, the dominant firm on the market for mobile communications, offered pre-paid billing and invested in coverage.  Movistar, as a new competitor, tried a different strategy by offering “subsidized” handsets to new customers.  The Economist reports that as result of Movistar’s customer approach their market share increased from 14% to 20%.

If there are good and bad subsidies, ”private subsidy” is a good subsidy.  The provider is seeking ways to increase its market share, but instead of running to the government for assistance or protection against competition, it seeks ways to offer its services at a lower price.  Offering subsidized handsets by mobile providers is a very successful strategy to attract customers. In fact, the program, in its characteristics, resembles the “loyalty programs” in financial or airline industries.  Providers have guaranteed users in the network, while customers have access to handsets which otherwise would have been out of their price range.  A ”silent” third party of this contract are the handsets makers.  They also see increased demand for their products and the competition among them forces them to innovate.  Prof. Thomas Hazlett from George Mason University School of Law makes an excellent argument for the benefits of  handsets subsidies. 

The mobile industry is evolving and adoption of new technologies can be implemented more efficiently when benefits for all parties across the board are clear and well defined.  The mere fact that national regulators are shifting policies to allowing such bundling speaks about the advantages this approach brings.

I really don’t know why they are called Loyalty Programs.

Airlines, car rental companies, hotels, supermarkets and a few other usual suspects coddle together complex rewards schemes aimed at securing our loyalty but usually end up making us hate the company we didn’t mind supporting in the first place.

Take the airlines as a prime example. Even if you fly every week on the one airline, spending days on end away from your family, it takes about two years to generate enough points for anything more than a half hour flight to some place you do not want to go at a time that is completely inconvenient. It is so thoughtful of the airlines to only offer reward seats on the 6am and 1130pm flights. It doesn’t take much imagination to guess why the worst times are the only options on option. One airline offers reward seats on most of its flights but it would take a lifetime of flying every day of the week to accumulate enough points to ever afford those flights. How does 590,000 points from Sydney to Los Angeles sound to you? I assumed it must have been in their new space ship but no, just their regular flights that are now mostly half full at best. There is nothing more upsetting to a loyal frequent flier who tries to book ahead and is told their are no FF seats on a flight, only to find the plane is empty.

The only reason that a few of us can ever afford a FF flight is that our credit card points can be transferred to a selection of frequent accounts. Maybe that is why the number of points to fly anywhere has doubled over the past few years. It is really the credit card providers that benefit now, not the airlines.

Instead of treating us like valued and loyal customers, the airline reward programs like to charge us as many points as they can, on the the most inconvenient flights and often with partner airlines desperate for customers rather the airline we are allegedly loyal to. How often have you searched for a FF seat six months ahead of time only to find absolutely nothing available or at best a flight via Fiji on one of the world’s oldest aircraft.

If by some miracle you do have enough points to purchase a FF ticket don’t forget to budget for the hundreds of dollars of additional taxes that are not included.

What ever you do don’t try and make a change. This week I had to make a simple date change and was slugged $200 plus a $50 service fee (not specified anywhere in the terms) – $250 for one minute’s worth of button pushing at a cramped call centre in Malaysia. The change fee was almost a quarter of the original airfare and the terms of change are nowhere to be found on the airline’s outsourced rewards program website. Great move – outsource the job of looking after your best customers to another company in another country. That will work. Clearly the airlines only care about cost and not the very customers that fund the airlines ongoing success, or more likely failure. Loyal customers are treated like lepers as airlines clearly don’t want to make it convenient or cheap for their frequent fliers to redeem points.

Rewards programs are such a joke, my best advice it to keep your points on your credit card account until you are ready to fly, then pick the airline that offers the best deal at a the time your want to travel. Surely this defeats the purpose of a loyalty program. One airline got it right in the nineties – buy ten flights and get one free. Simple and motivating. Unfortunately the big guys temporarily dropped their prices to quickly put this well-meaning new comer out of business in a matter of months, then jacked their prices back up soon after.

What a surprise to read that airlines are the number one source of consumer complaints – canceled flights, misleading terms, lost luggage, running late, surly service, bad food and the list goes on. The people running airlines should take a good hard look at themselves and start behaving like a business that actually cares for the people they are trying to attract in the first place. Am I missing something in this business model?

In loyalty, as in everything, change is the only constant.  And we have all seen the pace of that change accelerating as technology advances.  Consider the radio industry, which took 38 years to become a 50MM consumer industry.  Television took 13 years to reach the same benchmark.  The Internet?  Four years.  And texting?  It surpasses the number of people on the earth daily.

 Colloquy study evaluated the “Best of the Worst” loyalty programs over a 16-year period.  During this time:

• 24% disappeared, with no replacement plan
• 14% disappeared, intending to replace
• 7% relaunched
• 21% underwent “major modifications”
• 34% “evolved”

In the end, 45% of programs had to retool or exit.  These failing plans had three things in common:

• Costs: 85% of programs reported flat funding across all customer segments – meaning the best and the worst customers were earning and being recognized at the same level.
• Conversation: 75% of programs reported having little to no consumer dialogue built in to the program.  If there is no capture or analysis of the customer voice – how does one know what works and what doesn’t?
• Data:  82% did not appear to be collecting or using member information, usage or transactional data. 

These results reflect a failure to acknowledge change in the three fundamentals of a loyalty program: its financial demands, the voice of the customers it serves, and the data that represents that voice.  

To be successful, every program needs to build trust, be relevant and deliver real value.  But on top of that, it is clear that constant reassessment is critical to keep a program strong.

I am a firm believer in loyalty programs, but I know that with some of them it almost feels pointless to give your number/card since it looks like it could take years to reach a reward level.  But these past two weeks were great for me on that front, and I want to offer you a note of encouragement.

Two weekends ago, I received $2.50 Extra Bucks back (a free ½ gallon of milk or cereal?) from CVS for purchases I made during the spring.  A few days later, I redeemed $20 in cash back I had accumulated on Discover for a $25 gift card on Banana Republic, which I used over the weekend to get a top for free!  I use my Discover card mostly for purchases that give me a 5% cash back bonus, which means it takes me a little longer to accumulate cash back than if I used it as my primary card, but I still usually accumulate $20 every 3 or 4 months.

A $5 certificate on Best Buy also came through my Inbox last week.  Their Reward Zone program gives $5 for every $250 spent, and the netbook I bought for my mom last month was $250 and some change.  In the mail, I also got a $10 certificate from DSW just to welcome me to their rewards program (I have only ever made one purchase there before) – and there, $10 goes quite a long way.  And, a year since we first started using OpenTable, we finally reached the points for a $20 gift certificate, which can be redeemed at any member restaurant.  Admittedly, $20 is not much compared to how much we spent dining out over this past year, but being rewarded for using a service that makes life more convenient (no calling restaurants for reservations) is always great.

And in terms of future rewards, thanks in part to my AAdvantage/Citibank credit card, I recently reached enough miles on American Airlines for a free flight to Europe.  While I haven’t booked my ticket yet, I am planning on going to England in a month, and if my recent experiences with reward programs are any indication, I expect redeeming my miles for a flight will be a breeze, too.

Some rewards programs are obviously more generous than others, and I think that the instances in which it may make sense to spend money just to get a reward are few and far apart.  Nonetheless, if you diligently use your loyalty number/card whenever you do make a purchase, there just might be a reward coming your way sooner or later.

After 5 years of working exclusively with FI’s and traditional loyalty programs, I decided that it was time to move on.  My search landed me at the market leader for Merchant Funded Rewards programs, Mall Networks.  This opportunity allows me to work within many different industry verticals as well as some advanced platforms that create really engaging experiences for rewards program members.    Not trying to sound like a sales pitch, but now I understand why companies are so hot on MFR providers!  Come visit at www.mallnetworks.com.

Talk to you soon,

Kevin