Not quite yet.

There are still plenty of traditional loyalty card holdouts, and based on Colloquy’s data, many loyalty program members are active in name only. In other instances, fully digital customer rewards programs have yet to reach maximum capability – even as they’ve proven vital in the collection and analysis of, as well as real-time action upon, consumer metrics. It’s also a way to obtain granular customer insights so downstream errors can be corrected immediately.

While we often speak of fostering omnichannel loyalty, an enterprise-level initiative to drive, track, measure and reward incremental behavior throughout the enterprise and customer experience, we in the industry don’t talk enough about the additional steps brands can take to augment their omnichannel experience. That means strongly considering an “omni-digital” approach to loyalty, or the pre-steps to successful omnichannel engagement, as well.

“Omni-digital” means collecting and sharing data not just within a single company or vertical, but across verticals too. While digital loyalty programs have a little longer to go before complete ubiquity, the good news is there are numerous examples of companies realizing digital loyalty’s benefits – or at least embracing high-tech attributes. These include:

• 7-Eleven: In April 2013, the convenience store franchise announced it was joining Belly, the Chicago-based local business rewards aggregator, for a trial basis. Not to be left out, McDonald’s, Domino’s, Subway and Chick-fil-A have also made clear they will be testing the platform. With Belly being used by more brands, the idea of loyalty aggregation, that is, sharing points between companies (in this case convenience stores), might gain an even more mainstream appeal.
• Hotel 1000: Recently ranked as one of America’s top 10 highest tech hotels, the downtown Seattle “technolodge” features everything from a virtual golf course, silent heat-sensing room doorbells, video phones and an intelligent mini-bar that alerts the front desk it needs re-stocking. Such digital and “smart” amenities suggest that this is what guests want to see and, more importantly, experience. It’s time for other hotels to catch up.
• Radius Financial:  The Toronto-based mortgage lender recently launched its Radius Affinity tiered loyalty program. Designed to incentivize brokers with perks like preferred rates and rate hold pre-approvals, this is the company’s first loyalty program of its kind. While many rewards programs are customer-facing, it’s important to recognize the upside to employee-based loyalty programs. Because a happy, motivated staff is proven to be a productive and revenue-generating one.

The bottom line: If brands as diverse as 7-Eleven, Hotel 1000 and Radius Financial are going “omni-digital” and embracing a tech-savvy approach to consumer outreach, isn’t it time your brand did too?

What are some other examples of digital’s impact on loyalty programs? What brand/s is/are truly lapping the loyalty competition? Going omnichannel is great. But the need to deliver unique offerings that attract, retain and engage customers is just as important.

When was the last time your brand boasted 33 million Twitter followers or had 55 million Facebook fans?  I thought as much.

The book, Monster Loyalty: How Lady Gaga Turns Followers into Fanatics, highlights several of Gaga’s greatest branding accomplishments including:

• Her focus on “one percenters,” the most dedicated fans.
• The emotional connection she makes with fans by acknowledging and publicizing her beliefs.
• Connecting fans through common experiences, heightening Gaga’s passion.
• Her decision to call her strongest supporters “little monsters,” an affectionate term engendering exclusivity.
• The embracing of shared symbols.
• Gaga’s apparently genuine caring for her fans (as much as they care about her).
• Feeding the content generation beast with largely positive stories that keeps her brand relevant and timely.

Of course, Gaga isn’t the first artist to attract mass appeal through effective branding. Fifty years after their first US chart topper (and 43 years since their breakup), The Beatles remain in high demand. Their albums sell across generations – a Pew study found Rock ‘n’ Roll the most listened to subgenre for those aged 16-64 – and the defunct band’s Facebook page has over 33 million likes.

She’s also not the first artist to name her fan base. Justin Bieber fans are “Beliebers,” Beyoncé has the “BeyHive,” Taylor Swift calls her legions “Swifties,” and who can forget the original “Deadheads,” who literally followed The Grateful Dead everywhere. 

The difference with Lady Gaga, however, is a matter of degree and forethought. The Beatles, for instance, didn’t popularize the Mop Top haircut envisioning its mass adoption whereas Gaga and her team have carefully controlled her image from the get-go, relying heavily on social media to achieve that critical mass.

But if adapting Gaga’s (or others’) success seems too remote for your brand’s loyalty program (after all, it might be hard to make your financial services customer rewards programs as popular as “Born this Way,”), Apple Inc. embraces much of the above list. Apple strongly caters to its already loyal fans, the company is imbued with Jobs’ sense of brand purpose and new product announcements feel more like theatrical blockbusters than media events.

To my knowledge, Lady Gaga has never attended any marketing or branding seminars and doesn’t have a major in business communications. But I think Huba, Apple, The Beatles and anyone else would agree that her seven-point plan of attack is an approach all brands across all verticals could emulate. Whether you’re John Deere, Calvin Klein, or Victoria’s Secret, brands must engage their particular niche first, find their unique story and tell it – before branching out. In other words, this isn’t the time to put on your poker face. Effective loyalty marketing requires genuine experiences and reciprocal relationships with extreme transparency and authenticity.

My advice: read Huba’s book. Think about the Lady Gaga brand. Think about how you can up your brand’s loyalty game using these tactics. And then share your thoughts with us in the comments below.

Another critical question is how a well-developed loyalty program can be used to further enhance the customer experience. And is it really possible for a mobile banking app to be as fun and as exciting as the latest mobile games? The answer may surprise you.

In this final of our three-part series based on an interview with the Credit Union Times, Kobie’s Michael Hemsey discusses how “plain vanilla apps” won’t get the financial services industry anywhere. 

The folks at Intuit® are hoping to get consumers to spend a lot of time using their Mint app, a personal financial manager that’s been pretty successful. Is it a good idea? Can it be more successful?
Mint is definitely a good idea. But there’s always a risk: if you build it, will consumers come? In this case consumers will come. Why? Because the app lends itself to more creative thinking than we’re seeing elsewhere. Even simple things like alerts and the notion of security, fraud and privacy. The banking industry is central to all of these issues and using mobile to send account alerts – especially in households with multiple credit and debit cards – is imperative.

How do you see bank loyalty programs evolving? Will their user frequency increase?
With the debit interchange issue and what happened to loyalty programs, banks have not turned away from offering loyalty and incentives for use of their debit and credit cards. Bank loyalty programs need to be more relevant. Mind you, banks work on this all the time. Kobie works with a lot of the banks that do so. They’re continuously focused on how to provide a better-integrated loyalty experience. On a macro level, the ability to provide offers that are germane to user interests and spending habits is essential.

Someone using their mobile banking app for 15 minutes might strike you as odd. What can they be doing for all that time? But that’s where banks have to get. Do you have a sense that banks realize their apps are primitive and that it’s time to raise the bar? I heard a senior executive at JP Morgan Chase say exactly that. Their goal is to build an app that’s as good as the best-selling game app. He’s not there yet. But they’re trying. Do other banks think that way?
The JP Morgan reference is very insightful. It speaks to what we’ve been discussing – providing more utility and a more social (and fun) mobile banking experience. Some banks are thinking that way, but not enough. Banks tend to rest on their laurels until someone comes out with the newest offering and then they follow versus lead. Whether it’s for IT reasons or otherwise, many banks are risk-averse.

Conclusion
Will mobile banking apps become the most frequently downloaded apps in Apple’s app store or Google Play, rivaling the coolest games? That’s unlikely, at least anytime soon. But the good news is that the financial services industry is clearly beginning to think creatively and is rapidly learning from other industry mistakes and successes. Whether 2013 or 2014 becomes the year where mobile banking apps take on Siri-like qualities and include social media real-time engagement also remains to be seen. But with thought leaders in the financial services, loyalty and IT industries addressing these challenges, mobile 2.0 for banking can’t be too far off.

If Mobility Matters: Getting to Mobile Banking 2.0 and this Q&A are conversation starters, where do we go from here? Since the vast majority of Americans use traditional banking services and more than half are smartphone owners, mobile engagement is becoming increasingly commonplace.

Ultimately it’s up to consumers to help banks navigate our mobile needs and wants. Let’s begin that part of the conversation in the comments below.

Kobie’s president, Michael Hemsey, believes banks can and should do a lot more. In the second of a three-part Q&A series based on an interview with the Credit Union Times, Michael reviews which industries are doing mobile well and how the banking sector can best emulate their success.

The question at hand is simple but critical: How can banks turn what is typically a 2-minute-or-less experience (a mobile banking transaction) and make it last 15 minutes or longer, driving engagement and newfound loyalty? 

What kind of industries are ahead of banks in term of mobile apps, and where can they look to learn?
From a social perspective the entertainment industry does rather well. Take movie theater apps. One of our clients does an excellent job incentivizing users to promote its brand. Consider the very specific use-case:  consumers see a movie. Then they post their ticket stubs on social media and provide reviews of the film, sharing them with friends. All the while they earn loyalty currency for doing so. Granted, bank experiences aren’t motion picture events, but the same social media engagement rules still apply. Imagine a Wells Fargo customer who has a great banking experience. Why shouldn’t that individual earn rewards via a loyalty program, promoting his or her experience and encouraging others to join?

The restaurant industry is also a mobile leader. Restaurants, of course, lend themselves to social experiences, starting with the fact that people like to take pictures of their food, who they’re dining with and where they’re eating. T.G.I. Fridays and BJ’s restaurants are strong examples of social integration and banks should follow their lead.

The telecom space is more challenging. People don’t think of their file or internet products the way they think about going to a restaurant. And yet companies like Verizon and Comcast would love to find a way to have that social integration work with their brand.

That said, existing bank app functionality is already solid. But more work is required. Mobile features like scanning and voice-activated questions and answers (like asking Siri where the nearest Wells Fargo ATM is) must be included.

Banks want customers to spend time on their app, but often the engagement lasts for as little as two minutes or less. Spending time on a mobile banking app is not like shopping on the Gap’s app. Your thoughts?
Given banking’s importance, you’d expect people would spend more time on mobile bank apps. But it comes down to how the information is presented. Does the app allow users to set spending goals? Does it let users pay bills (usually, that’s a given)? Does the app let the user receive offers based on their standing and relationship with the bank? Can they access mortgage information? Wealth management services? An auto loan, a credit card, a debit card?

Most banks have yet to take the mobile maturity step to make their app a place to spend 20 minutes and have fun.

Conclusion
Although 20 minutes might sound like a long time to be using a mobile banking app, the average American spends over two hours per day on actual mobile gaming. With that in mind, one-third of an hour doesn’t sound so hard to achieve. How else can other industries help banking reach these lofty mobile goals?

Stay tuned for the final discussion about Mobile Banking and the Future of Loyalty, where Michael Hemsey looks at the merits of a new financial management app, Mint, and how it can be further enhanced, driving ROI and consumer engagement.

Did you miss Part One of the Mobile Banking and the Future of Loyalty post?  If so, check it out here.

The Edge to Success: Intrapreneurship – Linda Rottenberg, CEO and Co-Founder, Endeavor
There’s nothing like being an entrepreneur – unless of course, you’re an intrapreneur! The term might be over 30 years old but its contemporary relevance has never been greater. In order to achieve maximum impact, companies must foster a corporate culture that encourages free thinkers: those who break the mold, are dedicated risk takers and “make chaos [their] catalyst.” So stop planning and start doing today.

Big Data at Work in Retail – Tom Davenport, Professor in Management and Technology, Babson College
Is Big Data a big deal? You better believe it. But how retailers use Big Data effectively is the key going forward. Instead of collecting all available data, having a more focused, shorter-term strategy is the best approach. The goal is to measure something NEW and IMPORTANT with an outcome that answers the most important question: what’s the next best offer or what will your customer be interested in next? Only then can Big Data analysis mature into something that is actionable, exciting and produces real results.

Connecting for a Higher Purpose: What For-Profit Companies Can Learn from High Performing Non-Profit Organizations – Marc Kielburger, Co-Founder, Free the Children and Me to We
It’s time for-profit companies started following non-profits’ lead and have a “minga.” That’s the Ecuadorian term for a “coming together for collective good.” In his session, Marc Kielburger stresses that too often corporate structures fail to empower their employees. That’s especially true when it comes to their youngest and potentially most valuable long-term group: Millennials. Ultimately, a happy and engaged staff leads to happy and engaged customers. It’s a positive vibe that imbues their purchasing decisions as well as brand loyalty. So the next time your employer is looking for ways to improve ROI, tell them to look for innovation within their corporate walls first.

Understanding the New Map of the World and What to Expect of the Consumer of the Future – Nader Mousavizadeh, CEO, Oxford Analytica and Columnist, Reuters
More connected. More individually empowered. More local. More global. Sound contradictory? It is. But in describing the consumer of the future, Nader Mousavizadeh carefully explains how these contradictions should be embraced, not feared. As much as businesses think their vertical operates in isolation from the world, nothing could be further from the truth. Businesses of the future must think global but act local because that’s what their customers are doing. Recognizing technology’s ability to unite a diverse humanity is key to true business success.

The Future Is in the Cloud – Tom Koulopoulos, Founder, Delphi Group and Executive in Residence, Bentley University
The future may be in the cloud, as Tom Koulopoulos rightly points out, but so is the present. And if your brand hasn’t recognized this game-changing cultural fact there’s still time to embrace its possibilities. But what exactly is “The cloud?” It’s the aggregation of all digital information, accessible and updatable by billions of devices from anywhere in the world. And it’s growing larger all the time with profound implications. Or, as Koulopoulos puts it, “we are creating a new intelligence that will understand us better than we understand ourselves.” For retailers, learning how to utilize this data is essential in influencing customer behavior, driving engagement, long-term loyalty and creating new experiences.

Death to Dumb Promotions – Marco Bertini, Assistant Professor of Marketing, London Business School
Are coupons and discounts the “gateway drug” for brands and retailers? Marco Bertini makes a compelling case that they are. As with a chemical addiction, companies that employ heavy discounts often see a short term “high” or sales spike. But every high eventually wears off and customers are expecting greater incentives for their continued loyalty. This is the trap of smart versus dumb promotions. Discounts alone aren’t bad; it’s only when customers are conditioned to expect them that they become a problem. Pairing a deal with impactful psychology will help raise a brand’s promotional IQ fast.

CEO Session: A CEO Glimpse of the Future– Jill Braff, Executive Vice President of Digital Commerce, HSN and Robert Moran, President and CEO of PetSmart
What can the Home Shopping Network (HSN) and PetSmart teach executives about running a better business? Plenty. Both are aggressively finding new ways to break the “fourth wall.” In film and television that means the actors speak directly to the audience, acknowledging its existence. More broadly the “walls” that once separated customers from their brands are breaking down too, as are the walls between employers and employees. This is being accomplished in internal and external ways, including de-siloed sharing of data within companies and genuine engagement of customers in ways that build long-term trust and generosity. Learn how both brands are using psychological and data-driven knowledge to improve the quality of their services.

We’re Not Consumers, We Are People: Marketing with Social Media – Douglas Rushkoff, Media and Technology Theorist and CNN Commentator
“Retrocausality” and “everything old is new again.” These words summarize Douglas Rushkoff’s presentation as well as the themes in his book, Present Shock: When Everything Happens Now. It turns out that Retrocausality, a quantum physics term, has very practical brand relevance. Under unique circumstances, “effect” can precede “cause.” Retailers, with all marketing and consumer engagement happening simultaneously and across multiple channels, already know this. Here, too, the cause and effect relationship no longer applies. Meanwhile technological innovation, particularly real-time social media and consumer metrics accumulation, is helping return to consumers a level of brand authenticity, transparency, trust and engagement not seen in hundreds and perhaps thousands of years. Learn how today’s technological advances are bringing the best of mass production and hyper localism together, helping define a new consumer-brand relationship. 

CMO Session: The Changing Role of Marketing in a Customer Powered Environment – Kim Feil, EVP & Chief Marketing and Strategy Officer, OfficeMax, and Don Hamblen, Group Vice President, Chief Marketing Officer, Roundy’s Supermarkets
“Brides make the dresses beautiful” might be a fun phrase used by Brian Beitler, of David’s Bridal, Inc., but its relevance goes far beyond wedding gowns. His point: people make the products, not the other way around. It’s a lesson all retailers must learn. Not just in dealing with customers but with employees as well. Good corporate management begins and ends with A+ human interaction at all levels and across all channels. Genuine connections and genuine caring yields a genuine employee and brand loyal customer. Throw in a dose of unbridled honestly (pun intended) in the event your brand fails to deliver on its promise (as was the case with J.C. Penney) and you’re well on your way to higher employee and consumer satisfaction.

But what does “going mobile” really mean?  It means that the future of many financial services programs will be centered on some form of mobile strategy. Those programs will also be heavily influenced by the latest loyalty program and technology developments. Kobie’s president, Michael Hemsey, recently shared his views on mobile banking and loyalty in an interview with Robert McGarvey of The Credit Union Times for his article, “Mobility Matters: Getting to Mobile Banking 2.0.”

The following is the first of a three part series with Michael Hemsey that explores how coupling loyalty and experience-driven engagement with mobile will help move tablet and smartphone usage to the next phase in financial services loyalty programs, among other things.

How is mobile banking changing and what will the next generation of services look like? Banks generally tend to follow and not lead when it comes to creating mobile engagement. That way, they can see what others are already doing (successfully) and how they can improve mobile offerings.

Banks are also behind the curve when it comes to tablet apps – applications designed specifically for those devices. And that’s despite rapid adoption rates. Tablet engagement can be far more sophisticated and intuitive than that on smartphones, which consumers use in a wider variety of contexts. That’s why I think we’ll start to see an uptick in investment for both smartphone and tablet apps. To categorize the short-term and longer-term innovation goals, banks should do the following:  focus on the utility of those applications from a consumer perspective, discuss the enterprise from the bank’s perspective and dabble in social media.

What are the specifics of utility, enterprise and social as they relate to the innovation goals you mention above?
From a utility perspective, banks are adding capabilities such as mobile bill pay, mobile POS enablement and social check-in features much like those used by many restaurants. Doing so helps banks review customer transaction data and, in turn, tailor rewards or incentives for continued bank loyalty. Real time is key and I think banks and most apps are moving in that direction. Banks must also be more sophisticated in how their loyalty and incentive programs integrate the overall experience. Today they can be very disconnected. The third utility-related development uses mobile tools like receipt-scanning and voice-activated features.

Regarding enterprise, many banks can’t even tell consumers where the nearest ATM is relative to their location, nor can they list bank branch features or products. But, again, this is poised to change as second-generation mobile apps evolve, helping consumers make use of additional enterprise services like personal wealth management.

Banks’ usage of social media via mobile is also set for change, though I believe this is a longer-term development. Other industries have harnessed social media’s high effectiveness at incentivizing and promoting brand engagement. Its greatest potential, however, is not just in monitoring the online conversation, but in understanding and acting on what other people are saying about the brand. Twitter, Foursquare, Facebook, Intstagram, Snapchat and Pixnet are all good examples. Crowdsourcing is another way banks can better unite their customer base. But that, too, might be further down the road.

Takeaways
Banks know they have some catching up to do in terms of mobile innovation. But, as seen here, the industry is very aware of what’s possible and what other verticals are doing. It is only a matter of time (and investment) before banks and financial institutions – led by consumer demand – upgrade their mobile offerings.

The next conversation in this series will move beyond setting the mobile banking loyalty stage and discuss what industries are doing mobile loyalty well and how banks can model their “mobile 2.0” approach.

Read Part Two of Mobile Banking and the Future of Loyalty here.

­

That’s the $1 billion question currently being asked by media and retail industry experts. It’s also how much J.C.Penney lost last year when so many of its customers took their loyalty elsewhere after the retailer phased out the coupons shoppers had come to love and, more importantly, expect. As part of its turnaround, pundits argue, JCP needs to return to basics: no more costly store redesigns, fewer in-store boutiques and a complete restoration of the retailer’s daily discounts. Judging from its latest ad, JCP recognizes its errors, admits its mistakes and says: “we learned a very simple thing, to listen to you.”

I think what the retailer is also trying to say is: “we’re sorry.”

At Kobie, we’d recommend not getting stuck in that kind of discount dilemma to begin with. Stereotypical points-for-rewards programs and coupon-conditioning aren’t what inspires true brand loyalty. They simply inspire behavioral conditioning based on cost, not brand attributes – and it’s very difficult to build a sustainable loyalty program based on offering the lowest price alone. And at this week’s annual GRMA Leadership Forum, a high-level gathering of retail executives and industry influencers which took place in Kobie’s home city of St. Petersburg, many shared that sentiment.

The Response to Coupon Conditioning
Let’s say you are a retailer who offers daily deals or coupons as part of your corporate culture. What do you do then? Does that contradict our typical customer reward program recommendations? In light of a recent 2013 Coupon Trend Report which showed a 14% drop in the US coupon redemption rate for 2012, can J.C. really win back its formerly loyal customers this way, one penny at a time?

Yes. I think it can – by embracing both old and new tactics. That means returning to brand experience basics, including a store filled with discounts and deals. But it also means the use of omnichannel marketing and loyalty tactics – an approach which growing numbers of US retailers are adopting. Omnichannel loyalty, an enterprise-level initiative to drive, track, measure and reward incremental behavior throughout the enterprise and customer experience, is channel-agnostic and delivers true customer engagement.

So, if I were in Myron Ullman’s shoes, I would be:

• Launching aggressive campaign outreach across multiple channels, asking members of JCP’s Rewards program which discounts they would like restored first – beyond what’s already been put back.
• Making in-store product research and price comparisons easy and transparent.
• Put yourself in the shoes of your customers. Don’t just listen to your customers.  Understand what it means to “be” them.
• Considering QR codes or at least using image-recognition technologies like Google Goggles, a standard feature on the mobile search engine.
• Improving the brand’s mobile interface and online buying experience.
• Becoming Amazon-aware and beating competitors at their own game, improving rewards technology.

Almost a year ago, I wrote a blog called The Drug of Discounts: Couponing Addiction and What to Do About It, tepidly endorsing the now defunct “Fair and Square” pricing initiative and praising the brand’s attempt to break its couponing addiction. Rather than going cold turkey though, perhaps JCP should have explored some form of “coupon replacement” therapy instead.

Retail analyst Robin Lewis calls the current JCP crisis a “saga” and “perhaps the most colossal, dramatic, tragic, transparent, rapid and microscopically-tracked meltdown in the history of retailing.”

Let’s see if Ullman’s approach to the brand and to rebuilding customer loyalty can prove him wrong.

The QSR giant is considering a variety of options:

• Healthier menu choices
• Food delivery, tested in urban markets without drive-thru
• All-day breakfast
• Loyalty program creation

The first three bullets are no-brainers and make a lot of sense. But the fourth bullet, “loyalty program creation,” is vague. Is it possible McDonald’s isn’t sure how to further engage already loyal customers – the company’s most frequent patrons? Or have the company’s execs read the latest Technomic report, which found 64% of consumers are not restaurant loyalty members? It’s possible that McDonald’s fears the cost of loyalty implementation when few are interested.

Dismissive thinking aside, I think McDonald’s is in an excellent position to be truly innovative. Unlike KFC, the Golden Arches aren’t running out of golden nuggets. A 1% global sales decline is minimal and, compared to competitors, McDonald’s market share expanded and revenue grew 1%. This leaves the brand some wiggle room to explore new ideas.

Rather than thinking of loyalty as a separate idea, or as a fourth-bullet suggestion, McDonald’s should weave loyalty in throughout the dine-in and eat-out customer experience. Perhaps the company should consider:

• Creating tiered loyalty programs – linked to engaging mobile apps – wherein loyal delivery and all-day breakfast patrons are rewarded for their repeat business.
• The Happy Meal will soon turn 35. Why not use that kid-friendly classic to create a gamified marketing platform? From build-your-own-virtual-burgers to posting customers’ in-restaurant presence on social media, levels of activity can easily be pegged to a rewards program.
• Bring Canada’s “Our Food. Your Questions” campaign to the US. Here, too, the most commonly-asked questions (or perhaps even the funniest or most brutal) can be ranked and participants could be rewarded for their thoughtfulness.

Speaking of humor, rather than just rewarding lively customers’ questions, the brand should also try its hand at rib-tickling engagement. KFC’s “I ate the bones” commercials, part of an effort to promote the chain’s new boneless chicken option, are hysterical and very effective.

And that’s really what loyalty marketing is all about – genuine engagement and genuine experiences that make people smile, making them feel like, well, humans and not some proverbial hamburger meat.

That’s a recipe for success that Kobie helped BJ’s Restaurant and Brewhouse discover too. The chain added a social experience to its Premier Rewards loyalty program, allowing guests to share their onsite dining experiences through Facebook and Twitter. This feature helped BJ’s boost the frequency of patron visits as well as average spend per visit. And while it’s not stated explicitly in Technomics’ latest study, I would bet the US’s top 10 fastest-growing large restaurant chains of 2012 – including Dickey’s Barbecue Pit, with a 47% sales increase from 2011, and Firehouse Subs’ 34% sales surge – achieved those gains in part by finding new ways to connect with patrons.

Perhaps this tactic can also work for the biggest fast-food behemoth of all? What do you think about the possibility of McDonald’s implementing a loyalty program? I’d love to hear your thoughts and encourage you to share these with Kobie community in the comments section below.

Now for some better news: considering the number and popularity of co-branded credit cards linked to customer rewards, millions of consumers are part of financial services loyalty programs (total membership is around 420 million, including multiple programs) even if they’re not actively engaged.

So bringing these challenges together – skepticism of banks and a lack of clarity about loyalty program benefits and their differentiators, how can loyalty programs improve customer trust and preferences for a financial services brand?

Here are a few ideas that the Kobie team discussed on a panel at the Card Forum & Expo last month:

• Recognize and act on the importance of Big Data: Some financial institutions aren’t as proficient as they should be when it comes to dealing with ‘Big Data.’ Traditional consumer transaction data? No problem. Loyalty data? Less so. A recent Celent report finds widespread financial services’ awareness of Big Data, but uncertainty over what to do with the data collected. That’s despite the fact 60% of firms believe information is key to their competitive advantage.

• Consider convergence: Financial service companies frequently keep customer relationship data and loyalty data in siloed collection centers. But convergence of these two data sets will help paint a more granular, accurate picture. So if customer A has B amount of money invested, but chooses to spend on XYZ, financial services companies can put two and two together and incentivize transactions via loyalty rewards, possibly with gamified elements and mobile apps, adding to the enjoyment. While not strictly a financial services example, iZettle, the Swedish mobile payments company that many hope will be Europe’s answer to Square is a good example of data convergence. Rather than just logging credit transaction information, the latest device upgrades include the ability to analyze what was purchased, measuring revenue, top selling products, transactions, average payment volume and returning customers.

• Build trust through an omnichannel loyalty framework: As is the case with loyalty programs in other industries, transparency in the financial services industry is critical – especially following the US housing bubble implosion and the collapse of major lending institutions. Building trust and being transparent begins with engaging outreach across all marketing channels and consumer touch points. That’s what we call omnichannel loyalty – an enterprise-level initiative to drive, track, measure and reward incremental behavior throughout the enterprise and customer experience. The fact that there are 400 million American financial loyalty program memberships says nothing about their level of engagement or activity. Too often loyalty cards, digital or physical, accumulate in consumers’ wallets and on their smartphones without ever being used.

While big banks still evoke mistrust, a lot of smaller banks have fared better. Some, like Birmingham, Alabama-based Cadence Bank, are implementing several of the above suggestions as part of a new debit card loyalty program. Cadence builds trust by giving back to the local community through a “buy local initiative.” The program, called Buzz Points™, encourages local business owners to become Buzz Point Merchants, which according to the company’s data, increases local spending by 35%. The study also found that 52% of the money spent with local merchants remains in the local economy versus only 14% for big box stores. The campaign also relies on a host of social media, email, web and mobile outreach efforts – a clear nod to omnichannel engagement.

The reality is that consumers can’t live without credit cards or banks. But neither can banks live without customers. Loyalty programs that improve the customer experience, demonstrate transparency, engage across all channels and utilize Big Data in a way that drives enhanced consumer knowledge are the best ways financial institutions can improve long term customer loyalty.

Are you tasked with running a financial services loyalty program? We would love to hear your views on the program challenges you face and how you communicate and build trust with your customers. 

Too often, though, customer rewards programs are launched without proper planning, delivery and execution. Bram Hechtkopf, Kobie’s Vice President of Business Development & Marketing, talks with Roger Williams of Loadfactor about some of the reasons why loyalty programs can fail, including:

• Insufficient C-level buy-in – that is, loyalty program support coming from the highest levels
• Lack of front-line commitment, or ground-level employee awareness of corporate culture, the particulars of a specific loyalty program and a lack of genuine customer understanding
• A loyalty program’s failure to evolve, resulting in staleness and reduced member engagement

Even if your loyalty program’s membership numbers look healthy and your program employs the latest rewards technology and de-silos data, the human factor remains critical. Also critical is the need to drive incremental value to customers as well as incremental spend, retention and share of wallet. Watch Bram’s short video, which examines these issues and their relationship to the loyalty success framework Kobie calls the Five ‘Es’ – Enterprise, Engagement, Economics, Experience and Execution.

In what ways can the Five ‘Es’ be adapted to your own program’s advantage? Tell us what you think and what are some other ways that loyalty programs can evolve and adapt?