Loy­alty must be re­cip­ro­cal

The Insider - - CONTENT -

Loy­alty pro­grams in mag­a­zine pub­lish­ing are al­most non-ex­is­tent. Yes, there are perks handed out with some sub­scrip­tions (e.g. Mon­o­cle gives you a very spe­cial, sta­tus-like tote bag, chang­ing de­sign ev­ery year when you sub­scribe; Rogers awards air­line points with pur­chases of their print edi­tions), but there are very few pro­grams in the in­dus­try de­signed to build long-last­ing loy­alty be­tween read­ers, pub­lish­ers and ad­ver­tis­ers.

Di­ver­si­fi­ca­tion is cer­tainly help­ing in this re­gard, but it is not go­ing to solve prob­lem du jour fac­ing pub­lish­ers – the ram­pant rise of ad-block­ing.

Some pub­lish­ers are tak­ing the easy road (short-term gain which will ul­ti­mately lead to long-term pain) by block­ing the block­ers. Some are look­ing to adopt the freemium/pre­mium model where non-pay­ing read­ers see ads and pay­ing read­ers don’t. And then there are the des­per­ate ones who po­litely ask, beg and de­mand read­ers to turn block­ers off so the pub­li­ca­tion can keep mak­ing dimes off their dig­i­tal de­bris. But what’s in it for those read­ers when they com­pro­mise their experience out of loy­alty to a pub­lisher by un­block­ing their ads? Noth­ing, nada, zip, zilch, did­dly-squat!

Some­thing’s gotta change. With to­day’s news con­sumers, jour­nal­ism can­not be a one-way street and nei­ther should loy­alty. It’s time for pub­lish­ers to rec­og­nize their big­gest as­set is their reader and find new ways to re­ward them for their con­tin­ued pa­tron­age. One way to do that is through a loy­alty pro­gram that puts mem­ber­ship be­fore pay­walls.

Loy­alty re­quires longevity

A few stats to start off. There are 3.3 bil­lion loy­alty pro­gram mem­ber­ships in the United States with an av­er­age of 29 per house­hold; 96% of mil­len­ni­als to­day par­tic­i­pate in res­tau­rant loy­alty pro­grams. Of course, not all pro­grams are cre­ated equal; just like mo­bile apps, many of them are used a hand­ful of times and then aban­doned.

But, ac­cord­ing to a sur­vey by loy­alty mar­ket­ing agency Ketchup, for busi­nesses who do it right, sig­nif­i­cant gains can be made…

But suc­cess is not con­tin­gent upon the num­ber of mem­bers a pro­gram has; the longevity of their loy­alty is crit­i­cal to the bot­tom line suc­cess of the busi­ness be­cause:

It is 5-10 times less ex­pen­sive to keep a cus­tomer than to ac­quire one

Loyal con­sumers buy 90% more of­ten, spend 60% more per trans­ac­tion, are five times more likely to choose that brand for fu­ture pur­chases and de­liver three times the value to the brand ev­ery year

Sat­is­fied cus­tomers will tell nine other peo­ple about their pos­i­tive experience with a brand; dis­sat­is­fied cus­tomers are likely to tell 22 peo­ple about a bad experience

A 5% in­crease in cus­tomer re­ten­tion can in­crease a com­pany’s prof­itabil­ity by 75%

In think­ing about my per­sonal experience in the air­line and ho­tel space, this makes per­fect sense. Once I at­tained a cer­tain sta­tus with an air­line (even in my first year) and ex­pe­ri­enced the ben­e­fits per­son­al­ized for me, the more I was de­terred from start­ing at ground zero with a com­pet­ing brand.

That be­ing said, I also tend to be more crit­i­cal of the brand due to my height­ened ex­pec­ta­tions and am more likely to pro­vide di­rect feed­back to the brand when my needs are not met. But on the flip side, I am also in­clined to down­play a few less-than-fa­vor­able ex­pe­ri­ences be­cause they are di­luted by all the pos­i­tive ones I experience through the pro­gram.

The same is not true for new cus­tomers where a bad first experience can have dire ef­fects. Brands must not for­get that they al­most never have a sec­ond chance to make a great first im­pres­sion. When it comes to loy­alty, what you seed, is what you sow.

One size does not fit all

There are many dif­fer­ent types of loy­alty pro­grams avail­able to­day. Here are some of the most com­mon ones.

Tiered

Pop­u­lar with air­lines and ho­tels, tiered pro­grams of­fer dif­fer­ent re­wards based on where a cus­tomer re­sides in the pro­gram tier. Points are of­ten awarded based on miles flown, nights booked and/ or money spent. As points ac­cu­mu­late, mile­stones are reached where re­wards of higher value be­come avail­able. In most pro­grams the points carry an­nu­ally, but a mem­ber’s tier value is only as good as his pre­vi­ous year’s ac­tual en­gage­ment with the brand through travel or oth­er­wise.

Re­bate

Many credit cards and some re­tail­ers (e.g. Costco) use this type of sys­tem, of­fer­ing cash or credit back based on a per­cent­age of the to­tal pur­chases within a pe­riod of time.

Punch card

Th­ese “buy some, get one free” pro­grams are of­ten used by greet­ing cards, cof­fee shops and pizza joints to en­cour­age re­peat busi­ness.

Pay-to-Play

A prime (pun in­tended) ex­am­ple of this type of pro­gram is Ama­zon Prime. For a yearly fee, mem­bers re­ceive ex­clu­sive ac­cess to free two-day ship­ping, movies, TV shows, ad-free mu­sic, un­lim­ited photo stor­age, Kin­dle books, etc.

Points-based

The more you en­gage with a brand the more points you get. The more points you get the more re­wards you can en­joy by re­deem­ing your points. It’s simple and works well with ra­dio sta­tions, phar­ma­cies (so well that some gov­ern­ments started reg­u­lat­ing them), su­per­mar­kets and restau­rants. En­gage­ment can be any­thing you de­cide (e.g. time spent, money spent or num­ber of trans­ac­tions per­formed).

Loy­alty for all

When one of the mo­bile op­er­a­tors, Three, an­nounced it was block­ing ads at the net­work level, it brought to light some facts that many pub­lish­ers missed, or per­haps ig­nored. Non­sub­scribers are al­ready pay­ing for their con­tent.

Ac­cord­ing to a re­cent study by En­ders Anal­y­sis, be­tween 18% and 79% of a user’s mo­bile data is ad con­tent, depend­ing on the site. Ev­ery time ads show up on their mo­bile de­vices, con­sumers are cough­ing up cash through data charges – charges that ad­ver­tis­ers should be pay­ing.

All read­ers de­serve to be rec­og­nized for their fi­nan­cial sup­port of news­rooms. One way to do that is through a loy­alty pro­gram that com­pen­sates them for their par­tic­i­pa­tion in the con­sump­tion, cre­ation and broad­cast­ing of con­tent.

Here’s one idea…

Award points to reg­is­tered mem­bers that they can re­deem at spon­sors/ad­ver­tis­ers’ es­tab­lish­ments depend­ing on how much they in­ter­act with your con­tent. The point struc­ture could be based on the types of ac­tiv­i­ties in which the mem­ber en­gages, such as time spent read­ing, com­ment­ing, shar­ing on so­cial me­dia or via email and in­ter­act­ing with ads.

The more read­ers en­gage with the con­tent (ed­i­to­rial and ad­ver­to­rial), the more points they ac­cu­mu­late for them­selves. Higher en­gage­ment will also in­crease the value of the pub­lisher’s dig­i­tal prop­er­ties, at­tract­ing more ad­ver­tis­ers will­ing to pay higher ad rates.

To do this right will re­quire an in­vest­ment in be­hav­ioral an­a­lyt­ics, which may scare some pub­lish­ers away. But as me­dia an­a­lyst, Ken Doc­tor said, “With­out that core of busi­ness in­tel­li­gence, pub­lish­ers are fly­ing blind and by 2020 they won’t have any busi­ness left.”

Great loy­alty pro­grams start with great data, but CRM is no longer enough for suc­cess; a CEM (Cus­tomer Experience Man­age­ment) sys­tem is crit­i­cal, es­pe­cially with to­day’s con­sumers who ex­pect brands to use data in­tel­li­gently to con­tex­tu­ally per­son­al­ize and el­e­vate their experience – a manda­tory in­gre­di­ent for on­go­ing loy­alty.

In the travel in­dus­try, it’s about cre­at­ing emo­tional con­nec­tions with prospects from their ini­tial in­ter­ac­tion with the ho­tel or air­line, to ev­ery touch­point through­out their jour­ney with the brand. Some do it very well and are reap­ing the re­wards.

Mar­riott Re­wards of­fers the largest re­ward pay­back to its mem­bers which has turned it into a multi­bil­lion-dol­lar en­ter­prise.

The Qan­tas Air­ways loy­alty pro­gram gen­er­ates US$1.273 bil­lion in rev­enue from di­rect sales of miles to its part­ners.

In the pub­lish­ing in­dus­try it’s re­ally no dif­fer­ent. Al­though the re­la­tion­ship is more dig­i­tal than phys­i­cal, it is still crit­i­cal for pub­lish­ers to con­nect with peo­ple at an emo­tional level be­fore, dur­ing and af­ter they’ve en­gaged with con­tent. It’s all about build­ing and nur­tur­ing re­la­tion­ships with to­day’s news con­sumer by giv­ing them credit for their con­tin­ued con­sump­tion of con­tent, not just their cash.

Loy­alty and the ME gen­er­a­tion

Mil­len­ni­als are of­ten cat­e­go­rized as self-cen­tered, en­ti­tled and fickle. Many or­ga­ni­za­tions be­lieve that brand loy­alty is some­thing mil­len­ni­als’ par­ents prac­ticed, but not their chil­dren. Not true! Within the last year,

63% of Gen Ys joined a loy­alty pro­gramme, com­pared to 55% of the gen­eral pop­u­la­tion.

But if you think you’re go­ing to be able to ex­ploit them or ig­nore them once you’ve snared them, think again.

49% of mil­len­ni­als will stop us­ing a loy­alty pro­gram if they re­ceive com­mu­ni­ca­tion that isn’t rel­e­vant to them; only

37% of oth­ers will do the same. Mil­len­ni­als aren’t fickle; they’re just fed up with be­ing fed crap.

If you want to re­tain the loy­alty of the gen­er­a­tion that is ex­pected to col­lec­tively spend $200 bil­lion an­nu­ally by 2017, it’s time to start giv­ing them what they want, and what they want in a loy­alty pro­gram is:

- Easy and fast-to-earn, per­son­al­ized re­wards

- Abil­ity to choose re­ward cat­e­gories

- A mo­bile-friendly experience

But pro­gram ben­e­fits are not enough...

- 62% of mil­len­ni­als say that if a brand en­gages (NOT broad­casts) with them on so­cial net­works, they are more likely to be­come a loyal cus­tomer

- 42% want to co-cre­ate prod­ucts with the brand (In the case of pub­lish­ing that means par­tic­i­pat­ing in the cre­ation of con­tent)

- 75% ex­pect the com­pany to give back to so­ci­ety and lo­cal com­mu­ni­ties

Most com­pa­nies of­fer purely trans­ac­tional loy­alty pro­grams, which re­quire cus­tomers to make a pur­chase first be­fore they can reap any re­wards. Un­for­tu­nately, 77% of those pro­grams will fail in the first two years. That 1990s men­tal­ity won’t work in pub­lish­ing where the will­ing­ness to pay for con­tent is con­tin­u­ing its nose­dive.

It’s time to rein­vent the loy­alty agenda by of­fer­ing a pro­gramme that in­creases trust, en­gage­ment and loy­alty be­tween pub­lish­ers, read­ers and ad­ver­tis­ers and ev­ery­body wins:

- Read­ers get re­warded for their loy­alty

- Pub­lish­ers get more traf­fic and longer en­gage­ments, in­creas­ing the value of their web­sites and apps, and gar­ner­ing higher ad prices

- Ad­ver­tis­ers get bet­ter ex­po­sure and value for their ad dol­lars

Put loy­alty be­fore pay­walls

Al­most ev­ery­one agrees that qual­ity con­tent de­serves com­pen­sa­tion, but that doesn’t mean read­ers have to carry all of the fi­nan­cial bur­den. They are al­ready pay­ing with their eye­balls, time, per­sonal in­for­ma­tion, con­tact de­tails, and data plans, all of which can be mon­e­tized through qual­ity ad­ver­tis­ing. Pub­lish­ers, read­ers and ad­ver­tis­ers need to work as a team to cre­ate a win-win-win sce­nario for all.

Dou­ble Fine founder Tim Schafer once said, “If you’re not loyal to your team, you can get by for a while, but even­tu­ally you will need to rely on their loy­alty to you, and it just won’t be there.”

Loy­alty must be re­cip­ro­cal to be eq­ui­table. Think of it as a two-way street, con­stantly un­der construction. Start putting loy­alty be­fore pay­walls, give it be­fore ask­ing for it, treat read­ers as part­ners in­stead of pay­ers, and you’ll soon reap the re­wards of your la­bor of loy­alty.

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