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Amazon, Starbucks imagine new options for customer loyalty

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Amazon, Starbucks imagine new options for customer loyalty
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I was sharing thoughts on current trends in loyalty marketing with a group of bankers attending ASUG, the America’s SAP User Group yesterday. We talked about how the word Loyalty can be a distracting term by itself, and that focusing on the measurable results of customer behavior change from a data-driven customer strategy proves the loyalty business case every time.

Yes, that phrase is a mouthful, but it’s useful, often necessary to define the loyalty marketing discipline by its most critical objectives and granular components for business people to engage in earnest conversation about how loyalty can work in their business. Leave the definition at “Loyalty” and much of the room mentally checks out, thinking they’ve heard it all before about points and miles programs. Talk about measurable financial results and most people lean forward in their chairs and start asking questions.

A few brands are pushing the limits of what loyalty can mean for their organization. Amazon’s announcement that it is offering “Coins”, a virtual currency that Kindle Fire owners can purchase and then use to buy apps and games for the device, got my attention yesterday. Like many other Amazon customers, I received an email from Amazon letting me know that “if” I was a Kindle Fire owner, I would receive 500 free Coins to get me started with the new virtual currency. Coins are valued at $.01 each and Amazon offers some at a discount, bringing the price down to 96 cents on the dollar.

You might wonder what Coins has to do with customer loyalty. In my book, Coins are an example of how a brand that has developed a wide base of passionate customers, actually fans, can float tactics that achieve specific product related results, not to mention increasing cash flow and a financial benefit from float associated with the cash collected for Coins sold but not yet redeemed.

Starbucks really broke the ice in this area when it trialed a limited edition prepaid card made entirely of steel with 5,000 of the cards were made available at a price of $450 each. The lot of cards sold out nearly instantly with $400 of the purchase price allocated to a prepaid balance for future coffee purchases. My most ardent Starbucks buddies tell me that they can spend up to $60 per week at the chain, meaning that it will take about 7-8 weeks to burn off the balance for the highest value customers, about 2-3x that number for “average” users. For someone in my casual user range, it might take an entire year to burn up that balance.

Calculate a weighted average burn rate based on different user profiles any way you wish and the result is the same. Starbucks creates a huge stir among its most feverish fans and collects  around $2 Million in cash that it can sit on for an extended period of time. Roll this trial out to a larger audience and you can see the potential impact for Starbucks.

Both the Amazon Coin product and Starbucks Steel (my version of the name) card are illustrations of how brands with well executed customer loyalty strategies can extend their brand in any number of inventive ways. Both cases should make you more excited about the possibilities of customer loyalty and cause you to buy a bigger white board for campaign planning.

Apparently, whatever can be imagined by brands with a highly loyal customer bases can become reality. Instead of leaving loyalty in a box defined by points and miles, why not follow the lead of Amazon and Starbucks to leverage customer loyalty to meet goals not typically associated with loyalty programs.

It’s worth a try.



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