Postcards from Perkistan

Okay, so after being asked by a range of media outlets what I thought of the Choice wrap-up of loyalty programs I thought I’d better sit down and pencil in a response for our members.

Firstly - if you haven’t read the Choice material, you should.

Here are some top of mind thoughts - I’d love to know what you think.

Loyalty Card Review or simply supermarkets?

Firstly (and I know this is being a bit trite) but headlining your article as a Shopping Loyalty Cards story and then only really reviewing two supermarket programs in detail and anecdotally looking at a couple of other larger programs seems a bit disingenuous.

I used Choice a lot when I was having kids and I didn’t expect them to do reviews of prams or cots and only look at the two major brands… If it’s a review of Supermarket Points Based Loyalty then call it that!

The reason this is important is that the media (and now Choice) can be guilty of not relating the loyalty market to a total consumer point of view. Supermarkets are important but a large amount of discretionary spending takes place in other retail segments - holidays, transport, insurance, fashion etc.

Picking one segment and then using this to say ‘loyalty programs don’t offer anything’ is simply wrong. Saying - ’supermarket programs in their current form offer low earn ratios when used without any related offer’ is a bit more correct. But it would have been a short report then!

I take on board that they also looked briefly at Myer, Priceline and a couple of others but this story was all about having a close look at the big two supermarkets (in my opinion).

We have over 650 loyalty programs in the Perkler database, ranging from membership entitlements and pure discount programs through to points accumulation. Each one of these types of programs, across multiple retail segments, is the consumer reality. This breadth of the industry simply isn’t addressed by Choice.

And that’s okay, just be clear about it when you are using the loyalty market to get publicity!

The maths of loyalty

The part of the report focused on the maths around earning points and the time taken to earn vouchers and flights is spot on (as you’d expect). I think Choice have always done an excellent job of breaking complex consumer interactions down to the simplest form to helppeople.

I guess what I also expected to see here is the linking of bonus deals and related programs that make this point generation more attractive. Phil Hawkins from FlyBuys certainly touched on this in the press that he did, and in fact Choice acknowledge the existence of these deals in one of their tables without then bothering to add those scenarios into their top line equations.

Under ‘What you get for your loyalty’ they say “You’ll earn more points and rewards sooner if you pay with an affiliated credit card, use your card at other program stores during the same week, do only one weekly shop, spend more or make use of bonus point promotions” Exactly. So where is the modelling to show how this affects the assumptions they made?

I think it’s a shame that Choice didn’t look into this. It could alter the story by a fair amount.

What those mean retailers really want!

This was the part of the story I found the most bewildering. Not because any of what was said was wrong, but because it seemed so naive. The report makes constant references to supermarkets and other retailers trying to trap consumers into giving away information, get them to shop exclusively at their stores and discriminate on discounts.

I would have thought that all of these tactics are widely known and accepted by consumers. Maybe I’m wrong, tell me if I am, but part of the loyalty dynamic is that consumers accept that the retailer is collecting information about them in exchange for a benefit!

So when I see “Discount Discrimination” in a story that is critical of programs not offering enough, I don’t get it.

I also think “Discount Discrimination” is “Tailored Benefit” something we’ve been trying to push programs to get better at. If it is a loyalty program, why should the guy who doesn’t buy as much get the same offer, even if we live under the same roof?

And Finally

I’ve only really touched on a few of the points here. I may be too close to this market now but I guess my overall feeling on the story was, yeah - so what?

The gaps in analysing the broad range of programs, investigating the relative worth of bonus shopping days and hidden member benefits like those you find in affiliated programs left me a bit underdone on this one.

From what I can tell, Choice got good press on this one so good luck to them - whether it helps anyone understand the loyalty market and how they CAN save I’m not so sure on.

But there’s always perkler.com for that

PS: no retailers were involved in the drafting of this response - not even our clients

I was put onto a post on Read Write Web this morning by a twitter connection ( @paulmckeon ) which highlighted a very interesting reaction to a technology we are investigating here at Perkler.

The story talks about price comparison smart phone apps - based on bar code scanners. It’s a cool idea and, I think, one of the next big moves in retail. For ages retailers have been talking about ‘real time inventory’ this is ‘real time pricing’.

RWW give examples of stores not really knowing how to cope with customers scanning products for their own purposes (in this case price comparison). The RWW article even links to an even more interesting (worrying?) blog post warning retailers to install phone jammers or have ‘no scan policies’ to stop people doing this.

I think retailers who even countenance such an approach are missing the point. Surely, if your customers are price matching and comparing - the best place for them to be doing that is RIGHT UNDER YOUR NOSE!

If they are there and doing it, you are uniquely placed to counter their bargain hunting and get the sale.

Ironically, emerging apps that use bar codes to provide reviews and ratings on individual products could actually lead to shoppers spending more money. If I scan a product that is $14.99 and a review tells me the $16.99 version is better, doesn’t the store win?

The reason this technology (and retailer behaviour) relates to Perkler is two-fold. Firstly, we think the use of scanning technology on smartphones is a great way for retailers to entice shoppers into the store.

When a Perkler does a search on the perkolator for a loyalty program in a location near them (on our iphone and storm apps that Adam is building as we speak), what better way to motivate them in-store by offering a small, additional, tailored on-phone perk. We think it is the next phase of loyalty and builds on a combination of on-phone coupons and loyalty infrastructure. And because the consumer initiated the search through the Perkolator, it isn’t a global offer and isn’t sent to them without warning (we hate ‘push’).

Neat.

The second way it relates to us gets me back on topic. I simply can’t understand retailers who aren’t willing to jump in to a consumer-driven competitive landscape. When meeting retailers to discuss Perkler most are very keen. They understand that if they work with us they will learn more about their brand and program performance than if they simply stick to their current research methods alone. They also know that our data will tell them if they are under-performing (not coming up in search preferences, not having perks that stack up or missing perks completely). Seems to me that is exactly the kind of information you would want to know.

Sure, it might be confronting. But if you don’t have a perk that is up to scratch, would you prefer consumers switching off without you knowing or would you like the heads up so you can evolve your program to meet the needs of the consumer. Isn’t that why loyalty programs are there?

So - let them scan I say! And partner with Perkler (and other social media tools like twitter) to learn things about your program before they disengage.

Justin

Bazaarblog - the blog of Bazaarvoice (a social community / commerce host company) is quickly firming as one of my most read blogs.

Late last week they had a fascinating post about the willingness of consumers in the UK to write review. A staggering 94% said that the main reason they did this was to ‘help others’.

Seems obvious really, but it’s nice to see some data on it. Added to that over 86% of people wrote positive reviews. This was really interesting as many retailers fear online reviews and communities because of the chance they will end up a dumping-ground for complaints.

We think people are much more interested in sharing the good news than reporting the bad and that’s exactly why we’ve spent so much time enabling comment, rating and discussion features in Perkler. 

Good to see those decisions backed up in one of the markets we hope to head into soon.

Justin

Really interesting article via shop.org today about the decline in retail sales for those in competition with Amazon because of their user-generated recommendations.

The loyalty and rewards market has a few start-ups offering products and services (particularly in the points program sector). None of them have really taken hold of the community and user-generated aspect.

At Perkler we are obsessed with the community driving the site. Most retailers have loyalty programs, but by allowing ‘Perklers’ to rate, discuss and recommend programs we think we will really lead to better programs over time. 

Another key part of the site is that any user, anywhere can suggest a program. This means your local one-outlet cafe with a stamp card can have equal weight on Perkler as a big franchise chain. It creates a place where real discussion about the loyalty offer can take place, regardless of the size of the retailer. Our local - Kona Coffee is in the Perkolator. Best Baristas in town and they give us a free coffee every time we buy five.

The Kona boys at work.

Go Kona - go loyalty community and bring on the recommendations and ratings - WE ARE PUBLIC AND LIVE NOW!!

Justin

The NRF has sent a link today to a Washington Post story about tapping into shoppers’ psyche to overcome the retail drop-off this holiday season.

Now, as a consumer (and a person) I always laugh at how ‘understanding consumers’ or ‘tapping into thought patterns’ need to be an actual activity for some large organisations - the best ones just get it, think it and act it all of the time.

A Loyalty Tea Party anyone?

Which is why I like the example in the story about Talbots - a womenswear chain. They have introduced a really neat loyalty perk. Loyal customers get the store for a party. Talbots supply the essentials (food,drink and clothing range) the loyal customer acts as hostess and brings a bunch of friends along.

Great way to engage, great perk Talbots!

I’d love to have a tea party at T2 here in Canberra!

When courageous companies come up with interesting perks like this, you can rest assured we will be highlighting them to their members on Perkler but also letting everyone else know that this retailer is really looking out for consumers - that’s the kind of news we want to send around the Perkler community.

Justin

Noticed today that over in the USA leading retailer Nordstrom has just announced double points up until the end of the year. Obviously they have made a decision to use their loyalty program to drive sales during this tough period.

It’s the kind of win-win we love here a Perkler. A strong retailer who is willing to alter the terms and conditions of their program to PROVIDE VALUE TO CONSUMERS. 

We can’t wait to work with companies like this to get word of their programs out to even more people.

Have a look at how a responsive rewards program can work here.

Justin