The Joys of Consumer Control

Last month in this space, Colloquy colleague Rick Ferguson noted the fertile range of loyalty tools available to marketers. The benefit of all those choices: flexibility. The challenge: choosing the most effective tool. What will spur better customer response? Cash back? A points program? Free signup? Paid membership with better rewards? A free Cadillac for every customer?

Some loyalty marketers turn to a group of consultants with a fair amount of expertise: the customers themselves. For example, I recently received a “hey-where’d-you-go?” reactivation letter from a credit card I’d not used in months. In essence, the letter said, “What’s gonna bring you back? A low interest rate? A zero-percent transfer option? Choose one, and we’ll be happy to accommodate.”

This is not a matter of marketers throwing their hands in the air and telling the customer, “You decide our strategy, because we can’t.” Customer decision doesn’t dictate the strategy. It is the strategy. Put the customer in charge.

The choice strategy has been used widely among credit cards. American Express has offered such choice for years, with fees for different levels of card products and associated benefits. Visa and MasterCard have employed similar efforts.

A recent offer involving American Express in Europe presents an example literally in black and white. In July, Virgin Atlantic Airlines introduced its Virgin Atlantic American Express Card, offering members of its Flying Club loyalty program a choice of two rewards tiers:

  • Sign up for the White Card and earn points for every £1 (British) spent using the card.
  • Sign up for the Black Card and earn twice as many points for every pound spent, thereby reaching redemption levels faster, but pay £115 yearly for the privilege.

At the other extreme are the choices offered by Turkish bank Garanti with the Flexi card introduced in early 2006. During signup, customers select from numerous options covering interest rates, reward percentages, fees and so on. For example, choose a higher interest rate for unpaid balances and offset it with a higher reward return percentage on purchases. Customers can even choose a reward specific to their interests: perhaps another 1 percent reward return on restaurant purchases. Garanti says the card has 9,000 possible financial combinations.

Not enough choice? Then pick your Flexi card color scheme. Better yet, choose from a gallery of pictures to grace the front of the card. You can even upload a picture of your children to appear on the card.

The myriad choices bestowed on consumers by American Express and Garanti benefit customers and marketers:

  • Customers feel empowered. They control the choice. And though they don’t think of it in such terms, they design the value proposition. A self-designed value proposition probably will be successful – and it’s the essence of relationship marketing. Customers also come away with relevant offers, and relevance is crucial to loyalty marketing, even if the relevance is self-generated. Consumer control and choice also feed into the soft-benefit recognition critical to emotional loyalty.
  • Marketers literally can test various value propositions in the field in a variety of participator control groups. When offered choices, which customer segments chose which options? This is in essence an answer-by-action customer survey. Garanti’s offer of multiple additional reward opportunities amounts to customer self-segmentation.

In the example above, Garanti doesn’t have to rely purely on transaction-data analysis to learn which customers would be receptive to relevant restaurant offers. Customers already declared their place in that segment by choosing the restaurant reward when signing up.

More complex programs require more complex setup and stewardship. Still, when developing a loyalty program, consider that one of the choices available to you is choice itself. There’s no better resource for your marketing team than that most honest of sounding boards: your customers.

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