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Wednesday, April 18, 2012

What Are Loyalty Experts Talking About?

Engagement is a buzz word of late, with every marketing firm and brand waking up to the notion that–stop the presses- engaging with and rewarding customers in relevant, timely ways generates word of mouth and increases sales. For one segment of the population however, engagement strategies have always been at the center of the sales pipeline. I am speaking of course, about loyalty marketers. You know the industry based on a system of engagement and rewards that consistently help retain customers and drive predictable sales?
They are the founding fathers and mothers of systematic, optimized engagement.
Every year loyalty program managers and CMOs gather to swap strategies, success stories and network at the Loyalty 360 conference, the Loyalty Expo. A marquee event for hundreds of people whose life’s work is to find ways to elicit the love and support of consumers, the L360 festivities are the spot for the original engagement and loyalty gangsters.  So what was everyone talking about this year? 
Loyalty Games
I heard it in the halls, on panels, and in my informal conversations. I saw it in the literature spread throughout the conference and it was clear to me that the loyalty industry is doubling down on something it practically invented: Gamification. For years everyone in the loyalty space has leveraged a system of points to reward and retain customers in a way that drives sales. It’s always been a game that retailers and consumers play.  So what made the buzz on gamification this year any different (except for the use of the buzz word)? Consumers and their adoption of games! While the principles of gamification remain the same, the playing field has shifted dramatically.
First and foremost consumer behaviors are changing. It can be argued that gaming has always existed in the consumer psyche, as evidenced by the age old art of haggling, whereby a consumer works an angle for a discount or conversely, whereby a retailer uses techniques of chance to conduct a sale. But think for a moment about how much consumer behavior has changed just in the past couple of years. People are spending an inordinate amount of time building farms on Facebook, checking in to Foursquare for badges, hunting down “deals of the day” and exchanging virtual credits for real or imagined goods.   In the casual gaming industry, business is booming in all directions- and loyalty, more than any other segment of the marketing industry is paying close attention.
Big What?
Big data is also a hot topic, but one that still engenders much confusion about exactly what “it” is and, really, how “big” it is.  In a nutshell, big data is about the potentially massive amounts of data that can come from a few primary sources.  First is, yes, gaming data.  When an application like Farmville becomes successful on Facebook, and daily usage soars into the millions, this application generates big data.  Second, it is data generated by sensors like RFID, which can be implanted anywhere.  As the web becomes more interconnected with sensors and similar devices, the data generated will, in fact, be big.  Third is data generated by consumers through “normal” activities like mobile applications usage, web browsing and social media interactions.  It is clear from the conference that brands are struggling with how to fit big data into their overall consumer engagement strategies, but they know that integrate they must.
Math Works!
Of course, if big data is a hot topic, then analytics can’t be far behind.  While there is nothing revolutionary to report on advances in statistical techniques and methods, it is the successful and innovative applications of these techniques to solve real problems that create buzz.  A key concept re-iterated many times at the show is the necessity to reduce the problem through the development of useable segmentation techniques that allow marketers to view their customers in terms of personas.  Developing and managing content strategies to 8-12 useful personas makes optimizing content a reality, rather than a dream.

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