Loyalty programs have come a long way for food and beverage marketers, from time-intensive point collection and redemption to personalized programs designed to foster an ongoing dialogue between marketers and their best customers and reward them more readily.
My Coke Rewards, Coca Cola Co.’s three-year-old loyalty program, has evolved significantly over time to better accommodate its loyal customers with more immediate rewards and benefits and give them a platform to provide feedback to the brand.
“The core of the program is the same, but how we’ve done it has changed over time,” says Michael La Kier, director of My Coke Rewards for Coca-Cola North America. The beverage maker’s original program began with codes printed on bottle caps. Consumers would collect the codes and redeem them for products.
“We followed the typical loyalty program model: customers would collect points over time to exchange for things like TVs and all sorts of big ticket items,” La Kier explains. “We were out of alignment with what people were looking for.”
My Coke Rewards has since morphed into a program that offers smaller value items such as movie tickets and product coupons that are more easily attainable for members “vs. larger ticket items where you save and save and save points and you get frustrated along the way,” La Kier says. “Getting a movie rental from Blockbuster isn’t going to change your life, but it’ll put a smile on your face and make you enjoy Coke all the more.”
The company also launched a redesigned Web site in July that gives consumers an easier way to connect with the brand and with other loyalty club members.
“One of the biggest pieces of value from this frequency program is having that direct relationship with consumers,” Kier says. “We’ve gone from sending out one message to communicating directly with people and understanding their needs. It enables a good relationship with consumers that we didn’t have before.”
Coke solicits input and preferences from members on a regular basis, and the loyalty program has become much more targeted over time based on the feedback, Kier says. There are 13 million members in the three-year-old program, and the company sends targeted e-mails on a monthly basis, using hundreds of iterations of the e-mail based on a person’s interest. “We take all the information that people have shared to customize them. Three hundred to 1,500 versions go out based on customer preferences,” he says. That means a customer who prefers Sprite and is an avid cook might receive an e-mail with Sprite coupons and recipes, while another member who drinks Diet Coke and enjoys movies might receive a Blockbuster free rental coupon. My Coke Rewards uses a proprietary database to handle the real-time decisioning engine to target them.
It is also applying that targeted approach to promote local events to loyalty club members in a specific geography. For example, a promotion in Atlanta to win VIP access to a Georgia Tech football game will only target residents in that city.
Another marketer now uses a similar laser-focused targeting strategy in its loyalty program. Chuck E. Cheese, the entertainment and dining chain for kids, targets loyal customers based on geography; it previously had a ‘one size fits all’ strategy, offering all club members the same discounts and information.
Chuck E-Club members are quizzed on their preferences via an e-mail preferences landing page on the restaurant’s Web site. The restaurant can segment them and design promotions around that.
“Chuck E. Cheese suspected certain markets would respond favorably to smaller, yet still attractive discounts, while other areas, including those particularly impacted by economic hardships, would require deeper discounts to drive them to stores,” says Charley Detwiler, account development manager at BlueHornet, Chuck E. Cheese’s e-mail marketing provider. “They were able to generate greater foot traffic in markets that needed it and increase profit margins in markets that would support reduced coupon offers.”
The company matched Chuck E-Club members with the nearest restaurant location and assigned it to the e-mail address on file. Then coupons were tailored based on customer and market data.
Loyalty programs overall are thriving in this economy. US consumer participation in rewards programs is on the rise across all demographic segments, according to Colloquy research published in July. The programs have grown 19% among the general population since 2007.
“They’ve become a lot more popular,” says Kelly Hlavinka, partner at Colloquy. “The average US household is enrolled in 14 programs, and they’re active in 6.2. Customers are looking for value.”
“Programs such as this are even more valuable given the economy,” Coke’s La Kier says: “Coupons are up. People are looking for more value. Marketers are playing around in this space more than before.”
However, he cautions, marketers “need a long view” of loyalty programs. “If it’s about a short-term bump, then maybe it should be about coupons rather than a standing program.”
Coca-Cola North America’s three-year-old loyalty program, My Coke Rewards, has evolved from bottle cap codes to a highly targeted, interactive online customer rewards program. The Web site re-launched in July with a more user-friendly approach, greater clarity around how to earn and spend points, and an atmosphere of exclusivity to make its members feel special. “We implemented easier navigation and [clearly] described the program and points and how to spend points,” says Michael La Kier, director, My Coke Rewards. “We want to provide that member [with] something extra and exclusive,” he said.
Chuck E. Cheese tailors its loyalty program not only based on customer preferences, but also based on other, fluid factors that can affect a member’s ability to visit the restaurant. It currently segments its Chuck E-Club members based on geography and market data, and coupons are tailored to each of those categories. Some members receive steeper discounts if, for instance, that market has suffered disproportionately from the poor economy. As a result, the company’s loyalty database has grown 59% this year, compared with 2008. Chuck E. Cheese has also seen a 75% lift in its e-mail coupon revenue.