Bill Hanifin
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Loyalty Truth has been giving a lot of thought towards the shaping of loyalty and rewards programs to engage the interest of Millennials and the broader digital consumer group we are calling Consumer 2.0.
With many merchandise offerings lacking imagination as well as value, and airline miles tough to redeem given capacity 
restraints on available reward seating, cash back has earned renewed popularity as a quick-to-earn and easy to understand reward.
The problem is, rational can be boring. And easy to understand sometimes means too easy to label. With Groupon offering a 50% off “deal of the day”, a 1% deferred cash reward seems to be teetering on irrelevancy.
A 2010 paper written by an esteemed group of professors from Harvard University, University of Virginia, and University of British Columbia, pointed out that, in most cases, people enjoy experiences over things. While an item purchased can bring temporary pleasure, it is an experience that leaves a lasting impression.
Music is experiential and has been described as a “time machine” by some people. Most of us can attest to the impact of hearing a favorite song on the radio. The opening notes can transport us back in time and bring us vivid memories of first dates, world events, or just plain old good times.
If you don’t believe that music is important to human beings, is pervasive in our culture today and can be used to shape purchase behavior, then at least factor in these statistics:
- MP3 players — Just under half of American adults (47%) own an MP3 player such as an iPod — a nearly five-fold increase from the 11% who owned this type of device in early 2005 – Aaron Smith, Research Specialist, Pew Internet & American Life Project October 14, 2010
- 16 percent of Americans age 13 or older are using devices other than their home computers to download software applications (apps), music, video, and other entertainment content from the Web – NPD Group, May 2010
- 75 percent of iPhone and iPod Touch users are connecting to the Web to download entertainment content and apps – NPD Group, May 2010
Rewards and Music have been linked in an interesting way so far. Several digital content providers, including iTunes, have made forays into the loyalty industry. Reward administrators were asked to pre-purchase exclusively download codes to offer music as a reward, and the redemption process was often cumbersome as it required consumers to leave the brand sponsor’s web environment to collect their music.
To my knowledge, there hasn’t been a fully integrated platform to deliver music and other digital content as a reward until PointTunes™ was announced last year. The platform makes it possible for a loyalty program participant to redeem points or miles directly for music, eBooks, software and games with a patent pending transaction process named PointRobot™.
I had the opportunity to interview the founder of PointTunes™, Bill Cunningham, who shared that PointRobot™ can be used to create a customized digital rewards offering where program administrators have complete control over their digital rewards options.
He told me that PointTunes™ has its origins through his work as a Product Manager for one of the largest employee rewards companies in North America. “During that time I was never presented with a viable digital solution by our vendors” said Cunningham, and “myself and other rewards administrators were looking to add digital reward options to help control costs and find new clients.”
If you understand the shift taking place towards customer engagement, you understand how breakage, while a tempting element of a rewards financial model, can have negative impact on customer relationships. With pressure on reward costs, digital content is attractive to brands sponsoring loyalty programs.
Something had been missing from the previous method of including music as a reward in most loyalty programs and Mr. Cunningham “believes digital rewards is a perfect fit for the loyalty market both from an incentive (do this get that) and a loyalty (points, miles et al.) angle.”
Considering that Consumer 2.0 is perfectly at home with social networks and location based marketing (Gowalla, Foursquare, Facebook, Twitter et al.), using digital rewards that are as mobile as your customers makes sense. To meet the need, Cunningham said a mobile rewards platform is planned for launch in 2011, allowing consumers to redeem for music right from their mobile handset.
Loyalty is evolving to become more social and to meet the needs of the brands that sponsor the programs. PointTunes™ is a group to watch as the “Social Loyalty” continues to unfold during 2011.
