The movie “Up in the Air” stars George Clooney as a traveling hatchet man, a road warrior who measures his success by his frequent flier miles and pack of loyalty cards. 

In the film, Clooney plays a detached elitist who meets his female counterpart in a hotel cocktail lounge where they romantically connect over loyalty cards, bantering over who has more points and privileges.  As they plan their next encounter on the way to separate departure gates at the airport, the camera scans a poster of a smiling pilot and the message: We Value Your Loyalty.

Loyalty has come a long way in promoting branding and making it an American tradition. Those who are faithful to a brand are rewarded.  That being said, the point of convergence for administering almost every type of loyalty program is a prepaid rewards card adorned in an infinite number of skins. 

Loyalty has become valuable enough to make it important to prepaid.  In turn, prepaid has served loyalty well by making the card the linchpin of today’s loyalty marketing programs. 



Prepaid the Rage

Mark Johnson, CEO of Loyalty 360 - the loyalty marketer’s association, said, “Prepaid continues to be the rage for incentive and loyalty programs and there is significant interest in Multi-unit, MCC, coalition type prepaid programs.”

Multi-unit refers to promotion packages such as dinner and a movie, or a baseball game and a restaurant.  MCC is a code used to categorize companies.  Coalition type programs are when a number of companies come together in a partnership and share offers, opportunities and customers.  Complementary companies partner to reward customers with a like currency, incorporating marketing, recognition and reward.

Customer loyalty programs rely heavily on prepaid products to dispense points, dollars, and other rewards via plastic cards, stickers, and tags, so much that loyalty programs have become passports. Customers receive status and the retailer gets an immediate influx of cash and returning customers.

When customers sign up for rewards programs, whether it be at Winn Dixie, CVS or American Airlines, it sets off a multi-touch marketing opportunity with many further avenues for offers, benefits, and cross promotions.  Essential to the marketing plan, the program is built to collect data that provides marketers with the information they need to analyze and report on their customers’ behavior patterns.  

“Prepaid programs can be tracked, providing redemption information and the like,” said Johnson.  “They can also be issued instantly in certain programs at POS or online, thereby creating a trigger as to when it was earned by an employee or as part of a customer loyalty program.”



Delivering Loyalty

The points of delivery have expanded from in-store to direct mail to point-of-sale (POS) and the web.  But as customers become overloaded with plastic loyalty cards as a means for account management, there has been a decline in acceptance. 

The Marketing Workshop found that 40% of gift card recipients don’t use up their loyalty card’s value.  The proliferation of loyalty programs has changed customer behavior.  Many shoppers decline to sign up to avoid more plastic and many leave their cards at home, diminishing merchants’ marketing opportunities.

Does it help when customers are able to access their loyalty account via their mobile device? A recent Motorola study regarding mobile retails found that 31% of respondents said loyalty account access via handsets would be an improvement, enabling customers to optimize their incentives.

“Plastic is not needed any more now that we can mobilize gift and loyalty programs, and at the same time significantly improve the customer experience,” said Kevin Grieve, CEO, Mocapay.  “The mobile platform provides a secure channel for delivering promotional text messages, mobile coupons, and a mobile receipt reminding the customer that he is only three meals away from a free sandwich.”

Mocapay offers another approach to enhancing both their gift and loyalty programs, targeting those who already accept loyalty marketing as part of their business model and entertain high frequency customers. 

For example, quick serve eating establishments can benefit from the mobile commerce solution.  In Denver, zpizza is using Mocapay’s mobile Software-as-a-Service (SaaS) technology so they can reach customers anytime, not just at the point of sale, and encourage purchases and brand affinity.

The merchant POS system is upgraded with Mocapay’s mobile technology (no new equipment is needed), enabling customers to sign up and add money to the account.  At checkout, the customer receives a one time perishable code from Mocapay on their mobile phone, they give the code to the merchant POS, and money is deducted from an online account. The consumer then receives a mobile receipt. The system supports web to mobile gifting, and will soon support mobile to mobile gifting to a friend.

Mobile gifting benefits the merchant as well at the customer, increasing revenue and widening their customer base. Grieve recommends sending a mobile message one week prior to expiration of points plus one additional friendly reminder, which results in a 30-40% customer response rate.

Marketers say the demand for mobile platform solutions has increased.  Taggo, launched by Aneace Haddad, a payment transaction “technopreneur,” has a technology that works with all mobile phones and carriers and does away with the nuisance of carrying a bunch of plastic cards in your wallets.  Customers can join new programs with a simple text message, without the hassle of forms.

Another automated loyalty program is loyalTXT, a system that uses the customers’ mobile number or email address as their “loyalty card” with a quick set-up via a POS application or self-service kiosk.  At the point of sale, customers can join the program by providing their mobile number or email address.  Using software provided by Sundrop Systems, Inc., the retailer enters the information into a self-registration station at the checkout counter. 

The customer immediately receives a text message welcoming them to the program and requesting that they reply with their email address.  Customers who reply to the text message receive an email message, and instruction on how to complete the registration online. Sundrop provides a coupon automatically via text or mail as customers earn rewards.



Tweaking the Business of Loyalty

Marc Lawn, of UK-based The Business GP, said that businesses are moving away from traditional loyalty programs. “The trend is about moving to even more personalization,” said Lawn. “Oddly, in a world of more and more media choices, people want more and more recognition.” 

Lawn explains that personalization is all about understanding the consumer in more detail to find out what they do and don’t like and, and how they communicate.  He cites eBay’s current loyalty program, which “does not make me buy anything I was not going to buy before so they are just giving me money but not developing a relationship.  Whereas, the Tesco Clubcard program in the UK recognizes buying behaviors and personal traits so it can ‘up sell’ to the customer and extend a repertoire of product purchases.” 

A number of innovative programs are emerging in the loyalty and incentive sector, report industry watchers.  Visa is looking to track prepaid open loop cards and how they may be driving behavior, according to Mark Johnson.  “We are also seeing coalition programs, as well as cards that can be product based,” he adds.  For example, a reward card for the movie “UP” at AMC Theaters is issued with a free popcorn and drink.  Companies that produce and market consumer packaged goods are known to be interested in highly interactive and tractable programs that lend themselves to analytics. 

Janet Boulter, Business Advisor, Center Consulting Group, suggests to her clients that they create a multi-focused program and acknowledge customers for a variety of criteria.  Give rewards for volume of business, payment schedule, flexibility and responsiveness. “Give a bonus in one or more areas,” stated Boulter.  “If they pay on time, reward with a percentage discount, or for being loyal customers for a long time, give a reward not related to their purchasing.”



The Role of Social Media

If personalization is a key to satisfying the customer and expanding the relationship, then it is easy to see how the social media phenomenon ties in. Friends and fans exchange quick communications and information on a personal level through Facebook, Twitter, and other social networking sites.

One provider of Customer Experience Management solutions, Empathica, recently announced that its GoRecommend application has generated more than 1 million posts on Facebook.

The application, launched in June 2009, encourages customers to promote positive retail experiences via Facebook using an automated referral process that is easy for the retailer to implement, and easy for the consumer to use. After customers complete a retail experience survey, the GoRecommend engine prompts those who were happy with their experience to make an online recommendation on Facebook.

The results directly translate into significant positive brand impressions, as the location-specific content will automatically appear on both a brand’s Facebook fan page and a user’s profile page.

“The nagging fear from marketers is that consumers dislike when brands invade their personal space online,” explains Andrew Datars, Empathica’s VP of Product Management. “What we’ve found, though, is that people are happy to make recommendations online and that the verbatim comments are very warm and sincere. We are excited to be driving a significant impact in the social media space and doing it in a way that retailers didn’t know they could do.”

Empathica says it has 18 brands scheduled for pilot tests, and 6,000 locations will be actively using GoRecommend by the end of January. The use of GoRecommend doesn’t require an existing social media strategy or even a company Facebook account, and is a way for retailers to introduce the power of using social media in conjunction with their CEM strategy.

Creating a Lasting Impression

Prepaid and loyalty marketing have a unique synergy that is destined to continue. Delivering loyalty status is a way of creating a lasting impression with shoppers and consumers, who actually develop feelings of loyalty to an airlines, a hotel chain, a coffee house…and the list goes on. 

The future of loyalty is a dynamic one and is likely to advance through the power of the mobile channel, “the next generation in supporting loyalty programs,” according to Grieve.

Prepaid products fit nicely into every channel, whether it be direct mail, internet, point-of-sale, or mobile.  Social media will further fulfill the merchant’s need to reach customers any time to encourage redemption and purchases.  Clearly prepaid providers have more opportunity than ever to gain from the lucrative business of customer loyalty.