How Social Media Can Enhance Loyalty Programs
U.S. marketers are convinced that social media is a perfect way to magnify the power of existing points-based customer loyalty programs, and much experimentation is going on. In fact, budgets for social media in connection with loyalty programs rose 300% between 2009 and 2010, according to a study from Colloquy, a loyalty marketing think tank, in cooperation with The DMA.
You might argue that social media in themselves encourage many of the kinds of behaviors that loyalty programs have sought to drive for years. What with “like” buttons on Facebook, and a strong focus on responding to customer service problems, social media marketing might even be viewed as some kind of next generation of loyalty program evolution.
At the moment, anyway, a wide variety of ideas are being applied. Let’s consider these experiments along the road to the future convergence of social media and loyalty marketing.
Starbucks
One of the earliest efforts to use social media to promote customer loyalty was Starbucks’s blanket invitation to customers to volunteer their ideas for how the company could improve, and suggest other products and services they’d like to see introduced. The program, called MyStarbucksIdea not only invited submissions but also encouraged thumbs-up or thumbs-down reactions to the ideas from other participants, really taking advantage of the social interactivity.
Already, 25,000 ideas have been submitted about coffee and espresso drinks alone.
KLM Airlines’s KLM Surprise Program
In the fall of 2010, KLM surprised a batch of its customers with one-of-a-kind gifts, presented at check-in at Amsterdam’s Schiphol Airport, and tailored to needs apparently expressed the customer’s prior comments on Twitter and Facebook. A customer headed to New York had mentioned his agony about missing his favorite soccer team’s big game, and KLM gave him a NYC guidebook highlighting sports bars where he could watch it. Another customer who had mentioned his excitement about using his new iPad on the plane was given a voucher for free iPad apps. The relatively small effort turned into a huge PR win, when the delighted customers talked about their surprises, passing Tweets and videos virally way beyond KLM’s expectations. Of course KLM also posted photos on its own Facebook page and a video on YouTube.
The KLM Surprise experience portrayed on YouTube.
Best Buy
The electronic retail giant has long owned the Geek Squad, a fee-based tech support team that makes house calls when people are having computer problems. But recently the firm launched Twelpforce (“twelp” being a neologism combining Tweet and Help). Twelpforce is a group of 2,200 Best Buy employees who volunteer on their own time to research and answer customer questions posed on Twitter. Combined with Best Buy’s own loyalty program, RewardZone, Twelpforce is engendering positive word of mouth and trust for the brand.
InterContinental Hotels
The hotel chain is concentrating its social media loyalty program in the form of exclusive customer communities. Three 300-member groups have been formed, through personal invitation to select members of the hotel’s Priority Club program. Members of the social groups are encouraged to respond to questions from company executives, and interact deeply, not only with the company, but with each other. The reactions are used to improve services, evaluate new product ideas, and stimulate continued interest in the brand.
Challenges
As with social media in general, marketers focused on gaining leverage from social media for loyalty marketing efforts still struggle with a few challenges. The most vexing is measurement. Giving away nice perks and getting a lot of viral buzz is great—but how do you tell whether there is any true improvement in loyalty as a result? Even if you capture the social media behavior in a CRM system, it’s almost impossible to set up the test-and-control methodology that would demonstrate a change in sales or profits at the customer level.
Best Buy has approached the problem with a purchase-intent survey approach. As many as 85% of Twelpforce followers surveyed stated that they bought or planned to buy in the 6-12 months after their Twitter interaction.
Another issue facing social media loyalty marketers is consistency. Unlike general marketing communications, social media interactions are inherently difficult to control—requiring fast, reactive, and highly personal activity on the part of companies. So it’s no surprise that integrating these channels with the tone and style of the brand’s messaging guidelines can be a challenge. But experimentation continues, and the future for social media’s impact on loyalty marketing is bright.