Locking In Loyalty

The Internet is still a brand new medium, and most web marketers are focused on driving traffic. But what happens once you get them there?

You don’t want them to give your site the once over and then leave; that is a waste of good customer acquisition dollars. What you need is stickiness (the ability to hold onto them longer). And you do it with loyalty programs also known as incentives, membership clubs, frequent buyer and rewards programs.

These promotions have been popular in the offline world to lock in customer loyalty. They entice prospects to become customers and then encourage them to purchase more often by dangling rewards. Customers are encouraged to buy more by earning points, which they can redeem for special promotions and free products. Sound familiar?

These programs help marketers identify loyal customers. And they can lead to more efficient marketing expenditures because of the recurring customer business. The beauty of it is that these types of programs allow marketers to get to know their customers more intimately. From the interaction, they can target customers with relevant offers more accurately and more cost efficiently – not to mention that loyalty programs yield higher response rates.

How many folks out there have the fond memory of filling up S&H Green Stamps books and sending them in for interesting products? (My tongue can still taste the awful glue from the back of the stamps.) But guess what? These programs have come to the Internet, and there is no licking just clicking. See, the Internet can improve many things.

American Airlines brought the AAdvantage frequent flier program to its web site with much success. Here are some reasons to consider creating or participating in membership programs to enhance online customer loyalty and build more in-depth customer profile databases.

Turn Browsers Into Buyers

We’ve all faced the challenge of encouraging our web visitors to become web customers. Most web marketers have had visitors spend some time on their site, but leave before purchasing anything or sending an information request. Incentive and loyalty programs could help change this phenomenon for you. With the loyalty model, you can increase first time web buyers, as well as increase repeat buyers.

MyPoints, formerly Intellipost, provides online direct marketing services with a focus on web and email incentive and loyalty programs, MyPoints and BonusMail, respectively. In addition to its own MyPoints branded program, it also provides custom loyalty program services.

MyPoints has over 200 direct marketing partners including 1-800-Flowers, Barnes & Noble, Target, Olive Garden, General Cinema, Blockbuster and CBS Sportsline. It has created a bevy of practical and easy-to-redeem rewards, such as gift certificates. For example, it engaged Sprint FonPromotions to bring branded prepaid long distance calling cards to the program, which has been the most popular reward to be redeemed by members.

As with many web marketing technologies, one-to-one web and online direct email marketing can be done less expensively and in less time than paper-based methods, such as direct mail. Steve Markowitz, chairman, CEO and fellow member of MyPoints, notes the advantages of online direct marketing:

  • It’s cheaper – It can cost at least 75 percent less, i.e., 20 cents for each email, versus $1.00 for each direct mail piece.
  • It’s faster – In the catalog industry, the cycle time from creation to mailing is about two months. It can take as little as 72 hours from creating the email promotion to receiving responses from members.
  • It’s just better – There is an immediacy to response because the recipient can click and respond instantly from the email message. There are no order forms to fill out and mail, and no phone calls to 800 numbers.

Most importantly, the MyPoints program generates 50 percent repeat business on average. How many of you out there in cybermarketing land have repeat business this high on your site? If you do, congratulations! If you don’t, then a loyalty program may do the trick. Based on your current operational and marketing cost structure, increasing your repeat business to this level or higher can do some magical things to your bottom line.

Build Relationships And Profiles

A loyalty program on your web site can accomplish some key goals. First, you can give new users incentives to make online purchases. Second, you encourage repeat web traffic, interaction and/or transactions. Third, you will build very deep customer profiles with every customer visit or transaction associated with your rewards program.

Plus, these types of programs can be integrated with other marketing activities such as direct mail, catalogs, and retail. For example, if your company has a web site, retail stores, and catalogs, you could give members a membership card and ID that they can use at any selling outlet. Wouldn’t you just love to be able to track customers at each point of interaction and transaction, no matter where they went to do their shopping?

At first blush, it seems these programs are ideal for business-to-consumer marketing, which they are. But there can be many business-to-business applications as well. For example, you could use a loyalty program system to track a business customer’s purchases and provide a special periodic rebate, discount or credit.

I am now a new MyPoints member. I filled out their detailed registration form, and here is a sample from the 37 questions they asked:


“Are you a grandparent?”
“What kind of pets do you have?”
“Are you a smoker?”
“How many computers do you have at home?”
“Where do you access the web?”
“What is your employment status?”
“What industry do you work in?”
“Which of the following have you ever purchased on-line?”

And this is just the beginning. My profile will continue to grow as I interact with MyPoints surveys, respond to email promotions, and buy products and services.

Of course, I know what you are thinking, what about privacy concerns?

“Customers welcome the program and are more comfortable with volunteering lots of information because of the value they receive,” says Markowitz. “In fact, more that two-thirds of our members have filled out the detailed registration profile.”

The more user profile data MyPoints collects, the better they target the ads and promotions. Markowitz goes on, “Our email campaigns achieve a 20 percent response rate on average because the messages are relevant to the customers. And in a recent member survey, 71 percent of the members said they wanted to receive more email from MyPoints.”

Privacy Example

Jesse Caslar is one of the 1.2 million MyPoints members and has been enrolled in the program for over a year. Recently, she redeemed her points for a Sprint Prepaid FonCard. Caslar has been an Internet user for 1 years and admits that her Internet use has increased because of the membership program. She likes these kinds of programs, because she receives advertising messages that she’s interested in. “They don’t waste my time sending advertising and promotion that I am not interested in. I don’t filter out the MyPoints email messages, but I do filter out spam.”

When asked about privacy concerns, Caslar was concerned at first that her name and information would be sold to other companies. MyPoints has committed to customers that they will not give or sell the information to third parties without obtaining the member’s permission. Caslar admits that she has given MyPoints personal information that she would not give other companies. She also believes the benefits she receives from the MyPoints program are a fair exchange for the personal information she has given them.

Next Week: More about online profiling.

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