Loyalty Truth

What do Lady Gaga, the Oakland A’s, and Big Data have to do with each other?

Each was in play at the 2nd annual Loyalty World USA conference organized by Terrapinn in Las Vegas last week. As much as I wanted to be at Mark Johnson’s Engagement Expo, the two events were on the same dates and Vegas had a certain appeal over cold and windy Dallas. Here’s a quick overview of the key themes of the event as well highlights of the more compelling presentations.

Big Data was the kickoff topic as Rick Ferguson, VP Knowledge Development AIMIA and Bryan Pearson, President LoyaltyOne shared their individual takes on the topic, illustrating why loyalty marketers need to be paying attention. Bryan explored the importance of data privacy and shared some great examples of how big data can be used to both attract and repel customers. Noting that trust has diminished between consumers and consumer brands over recent years, he shared that only 42% of consumers trust big business with their data. This and other good research was made available from a LoyaltyOne research document titled “Customer Data: Privacy, Profit and the New Paradigm”.

The LoyaltyOne research showed that 78 percent of customers surveyed report seeing no benefit in the communications or offers that come as the result of sharing their personal data with big brands. Bryan encouraged the delegates to be proactive in using data in a judicious manner and played a fun game with the group “Clever vs. Creepy” that illustrated the bright and dark possibilities of leveraging Big Data in the context of customer loyalty programs.

Rick Ferguson shared a forward looking presentation helping the audience define just what Big Data is and what it means to all of us as marketers, whether in direct or loyalty marketing. He share that one of the greatest challenges for firms expecting results from Big Data is that over 190,000 data analyst jobs will need to be filled over the next several years if value is to be properly extracted from the data farms.

Maybe most importantly, Rick highlighted that Trust, Commitment and Reciprocity are the foundational elements needed for brands wishing to communicate effectively with their customers. He also described in compelling detail the way brands are trending towards adoption of “offer anarchy” as well as other potentially destructive models to customer loyalty including the familiar “pay 2 play”. The challenge of course if to use Big Data in a way that serves to create and enhance real relationships, not just use data for data’s sake.

The first day of the conference was keynoted also by Cheryl Bachelder, President and CEO Popeyes Louisiana Kitchen. Cheryl provided a passionate account of how the Popeyes brand has evolved and emphasized that the chain identified its franchise operators as its most important constituency when engaging a brand retooling exercise a few years back. The constituent group included franchisees, guests, employees, shareholders, even vendors, so Popeyes has its eye on the ball in a way that Fred Reichheld advocated in his early work.

Popeyes runs its organization on sound principles and Cheryl noted that “listen carefully, but learn continuously”, coaching and development of franchisees, and creating an atmosphere of servant leadership were all core to their growth and success. Basing the business on this solid rock has paid off, as the operating margins for Popeyes have exceeded industry averages and locations are expected to double in the US over the next 4 years.

The two day event was punctuated by a number of other compelling talks. Among the memorable were an overview of Walgreen’s Balance Rewards program (12 Million enrollment in first few weeks) given by Adam Holyk and a review of the new Kellogg’s Rewards program (company grew its known customer database 250k to 15 Million in one year) by Kim Begeman.

Tony Ventrice, Senior Game Designer with Badgeville gave a highly insightful talk about how to merge game mechanics to make a loyalty program “get to the next level” and Marcin Kosciak hosted James Stoeppler to tell the interesting tale of how Enterprise Rent-A-Car built from a pure recognition program to a full fledged loyalty program between

Day 2 was a little more “showy” with talks from Billy Beane, General Manager Oakland A’s baseball team and whose work was the subject of the 2003 best selling book Moneyball and Jaunique Sealey, a social media strategist who helped Laga Gaga make her latest album Born This Way become a monster success.

Yes, among presentations from Gamestop, Virgin Atlantic, Choice Hotels, Motorola and Microsoft, I snuck in to provide a view into how loyalty marketing is transforming to work in the digital economy and previewed part of our Loyalty Manifesto which will be published very soon.

There were some scheduling issues as Hurricane Sandy ravaged the East Coast of the US and in the shuffling I was not able hear Barry Kirk, VP Loyalty with Bunchball, speak about driving engagement through game mechanics. Maybe Barry will turn that one into a webinar which we can all enjoy sometime soon.

The consensus among the tenured loyalty folks attending the show was that, despite the compelling material presented, the industry needs to execute a significant shift to stay ahead of evolving consumer behavior.  Considering that about 5 people in total were on Twitter during the event (check out hashtag #LWUSA), it’s clear that there is more gesturing towards the social graph than actual involvement with it.

Stay alert my friends, as the industry will see significant and positive change over the next 3 years. Be part of the growth.