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Discovery's Pilot Loyalty Program Has Cable Connection

Discovery Communications Inc. is testing a new loyalty initiative with cable operator Cox Communications that marries its retail and cable channels.

Akin to a frequent-flier program, the Discovery Passport Rewards Plus effort gives points to residents of San Diego County in California for actions such as buying products in Discovery Channel stores, catalogs and DiscoveryStore.com. Points are redeemed for various items, including paying for new cable services from Cox.

“Here we've got a chance to add together the assets of our network and our affiliate marketing and our stores and come up with a program that is going to drive more viewership to our television programming, solidify our relationship with our cable affiliates and generate big bucks in our stores,” said Joe Dobrow, vice president of consumer marketing and analysis at Discovery, Silver Spring, MD.

However, loyalty points are earned not just by buying. Consumers are rewarded for watching select Discovery TV programs and correctly answering trivia questions for proof of viewing, referring friends and family to the Passport program and registering for free online newsletters at Discovery.com.

In the 3-year-old Passport Rewards program, which will remain available elsewhere in the country, the 1.5 million members simply receive a $10 Passport certificate for every $150 in purchases at Discovery's three sales channels.

Key to the new effort is the relationship with Cox. Adding new cable services from Cox can earn points toward Cox Cash. These certificates can be redeemed for cable services including pay-per-view movies, digital cable, high-speed Internet access and select premium channel upgrades.

There is no deadline for redemption. The Discovery Passport Rewards and Passport Rewards Plus are administered inhouse.

Marketers and cable companies often face problems working together because of restrictions that prevent cable operators from sharing customer information with networks. But this arrangement sidesteps that issue because participants are both program members and Cox cable subscribers.

“Here we've created a program that we hope sort of gets around that system,” Dobrow said. “It enables us to start building a list of people who are watching specific programs, services and specials, which will allow us to go back and market to them directly or take advantage of word of mouth and hopefully build our audience ratings on TV.

“We really were excited to test this out with them initially, and we chose San Diego because that's the market in which Cox is dominant but is not the exclusive player,” he said. “You can draw a map of the cable operators in the United States, and it's a horrific patchwork quilt that's very, very hard to sift through. So we wanted to challenge ourselves in that market by intentionally creating these competitive challenges.”

San Diego also interested Discovery for other reasons. Discovery has four stores in that market out of 170 nationwide, but only two fall in ZIP codes served by Cox. The other two are in areas covered by Cox rival Time Warner.

“It forces us to learn how to respond to customers who become very excited by the prospects of joining the program and then we say, 'not if you're a Time Warner customer, only if you're a Cox customer,'” Dobrow said. “Now it's our hope and intention that we will expand this to other cable operators and to other markets.”

Discovery claims it has 10,000 Passport members out of 100,000 retail customers in San Diego, vastly outnumbered by Cox's hundreds of thousands of subscribers.

“Obviously, many of them [Cox cable subscribers] watch Discovery but are not part of the Discovery retail world,” Dobrow said. “So we saw a huge opportunity to reach out to all of those different folks and bring them into the new partnership.”

To get the word out, mailers went last month to 80,000 consumers, a mix of known Discovery customers and people on the database who signed up for sweepstakes or newsletters. A follow-up mailing is planned for late winter or early spring.

The Discovery Channel will support the effort with a spot on Feb. 11. It will be shown on other channels carried by Cox in San Diego, including ESPN, CNN and Lifetime.

Cox will complement that marketing. Cable billing statements will plug Discovery Rewards Plus. Further, Cox and Discovery partnered to drop about 70,000 e-mails to opt-in Discovery customers.

Cox also will run advertisements in a local TV publication produced by TV Guide. Signage in Discovery's four area stores will alert visitors of the new loyalty program, too.

Based on response, Discovery may extend the program to other markets, with Cox likely to be the cable partner.

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