Loyalty Panel Gives Pointers

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NEW ORLEANS -- Loyalty programs should be built by a team, incorporate flexibility, contain baseline metrics and offer customer choice, according to a panel that addressed a session yesterday at the Direct Marketing Association's 87th Annual Conference & Exhibition here.

The session, "Loyalty Leaders Tell All: Building Market Share by Building Customer Share," gave attendees a look at how successful loyalty programs work. Mike Capizzi, vice president of Colloquy Group, a consultancy operated by Frequency Marketing Inc., Milford, OH, moderated the discussion.

Participants included Carolyn Leveque, director of loyalty marketing at MGM Mirage, Las Vegas; Karen Maurice, director, relationship marketing at Best Buy Stores, Minneapolis; Bryan Pearson, president of the Air Miles Reward Program, Scarborough, Ontario; and Christine Pierce, director, partnership marketing of Delta Air Lines SkyMiles, Atlanta.

Panelists offered answers to a question from the moderator: What is the most important thing you've learned that you wish you'd known when you started your program, or what has been your biggest lesson learned?

"I wish I'd known that it takes a village to build a loyalty program," Maurice said. "Merchants, finance, marketing, they should all be a part of the equation. I wish we'd learned this earlier."

Best Buy's loyalty program, Reward Zone, launched in 2003. The fee-based program ($9.99 annually) enrolled more than 1 million members in the first three months and 3.5 million in the first year. Members account for 30 percent of all Best Buy transactions, and they shop twice as often and spend twice as much as non-members.

"I wish we had figured out the appropriate metrics looking ahead for two or three years down the road," Leveque said. "For example, we should have been able to tell two years down the road what our ROI analysis would look like."

MGM Mirage Players Club launched in 2002 and relaunched in summer 2003. The 9 million members earn points for both slots and table games when playing at any of seven MGM properties. Resort Rewards lets members redeem points for rooms, food and beverages, entertainment and retail merchandise with qualifying play. Member activity is recognized in real time for immediate rewards.

"The most important thing is to build flexibility into your program," Pierce said.

Delta Air Lines SkyMiles launched in 1995 and has 35 million members. In 2003, SkyMiles redeemed 2.8 million tickets.

Pearson discussed the importance of offering customer choice and ensuring the loyalty program is integrated into a point-of-sale system.

His program began in 1992, and 70 percent of Canadian households representing more than 14.6 million Canadians collect Air Miles. The program has more than 100 sponsors/partners and 500 reward partners. Fewer than 1 percent of members have opted out of receiving promotional/marketing e-mail.

Panelists also discussed how they measure program effectiveness. MGM Mirage looks for cross-property play. If customers visit several properties over the course of a year, the program is successful. Leveque added that cross-property play has risen 40 percent since MGM Mirage's loyalty program was introduced.

Maurice said that after getting feedback from members via the Internet and telephone that they weren't getting their certificates fast enough in the mail, "we put out e-mail certificates to give people what they needed."


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