When it comes to Baby Boomers, Millennials and customer loyalty, both groups can learn from each other. That’s especially true when topics like social media, corporate loyalty initiatives and mobile wallets are being discussed. All three aspects of loyalty engagement are undergoing profound change. Social media is constantly evolving so much so that even the youngest Millennials, tweens and teens, are beginning to move away from Facebook and Twitter in favor of native messaging applications on their smartphones.
Meanwhile, the mobile wallet may not gain the widespread appeal its supporters envision and corporate social loyalty initiatives are embracing tangible and status-driven rewards – using gamification to improve the user experience.
Bill Hanifin, loyalty expert and author of the Loyalty Manifesto, tackled these issues (and more) in his report Contextual Loyalty: The Evolution of Social Loyalty Truth. Hanifin, founder of LoyaltyTruth.com, is a recognized leader in loyalty marketing, social CRM, business intelligence and payment technology.
Here’s the conclusion to our loyalty and generational discussion.
Hanifin: Generation Y (Millennials) may have to accept that they have to do something to get something, as the world is not going to work on intrinsic rewards entirely. And extrinsic rewards were what traditional, Baby Boomer loyalty programs were built on. As or Boomers, they’re learning from younger generations that you can’t coax people into transactions. First-generation loyalty programs were able to get away with things that wouldn’t be allowed today. For example, absurdly overcharging for something and then “giving” double points toward its purchase. Consumers today can see right through that. And there’s a wealth of consumer data – prices, product reviews, etc. – just waiting to be tapped. In other words, consumers are armed with information and ready to put that knowledge to good use.
I’ve recently read several articles that discuss how the youngest consumers – tweens and teens – are starting to lose interest in social media, especially Facebook. Messaging apps are taking their place. How do you envision messaging apps affecting loyalty (if at all) and in what ways can this channel impact the loyalty conversation? Related to that, how hard is it for marketers and brands to utilize Facebook, Twitter, Foursquare and other social media outlets effectively if their impact is subject to constant change? In light of this new Millennial data, do you believe these channels are a passing fad?
Hanifin: It’s so easy to generalize. So many people are out there trying to draw mass conclusions about one generation it’s incredible. People are looking for the generational silver bullet – especially when we’re talking about channel engagement. The key to using social media and text messaging apps correctly is data analytics. Only by measuring how this generation (or any generation) prefers their brand interaction will marketers know if these channels are still being used in the same way by the same people as they are now. As long as marketers gather customer intelligence they’ll be nimble enough to make channel changes as needed, embracing new ones when they emerge and ditching older ones when they’re obsolete.
Asking too many questions can backfire as well. In a perfect world marketers aspire to 1-to-1 marketing. I don’t know if we’ll ever really get there. Short of that, though, carefully gathering, measuring and acting upon insights from highly segmented customer groups, including answers to concise, granular survey questions, will go a long way toward making sure brand engagement channels remain relevant, no matter what generation is the focus.
Mobile wallets get passing reference in your work. How do virtual currencies fit in with your intrinsic vs. extrinsic loyalty argument? Will 2013 be the year mobile wallets finally break out of their nascent stage? And how should loyalty providers be using their services?
Hanifin: I think we’re much farther away from mass mobile wallet adoption than many think. There is too much competition between mobile wallet creators and too many alliances trying to advance their own success. Mass mobile wallet adoption will not take hold unless two things are done:
1, Mobile wallets must make consumers’ lives easier. Think about it. How difficult is it really for a consumer to use a magnetic stripe card? Not very. Until it’s more convenient to use mobile wallets than pull out a plastic card, we won’t reach critical mass.
2. Universality of mobile payments is critical. The platform needs to be totally ubiquitous. Just like you use the same credit card in Florida that you do in California. There’s no conversion required. Let’s say ISIS came up with a solution that clearly has value and is good for consumers. Even that might not be the winner if it isn’t as commonplace as magnetic stripe cards and card readers.
Can you cite additional examples of companies doing social loyalty well? And how have they struck a balance between tangible and intangible loyalty?
Hanifin: American Express is doing a good job with social loyalty. They’ve done some exciting work with Twitter and Foursquare based on social promotions. American Express customers can link their Twitter accounts to their AmEx cards. If they tweet about certain brands they earn X-percent off that purchase. AmEx’s partnership with Facebook allows customers to convert points to Facebook Credits for use when purchasing in-game items. For the popular Facebook and mobile game Candy Crush Saga, in-game purchases include buying extra lives, freezing time and power-ups to beat additional levels, among others.Lastly, brands don’t need to have an overarching social loyalty program. Trying different things and being experimental is what’s most important. Hotels have gotten in on the act too. A growing number of hotels let you check in to their property through social media in order to earn points toward your stay.
Loyalty is ultimately about more than Millenialls, Baby Boomers, technology, and more than intrinsic and extrinsic rewards. Loyalty comes down to fundamental psychology; how do brands spark behavioral triggers that:
a) make consumers feel good about their brand engagement
b) and do so in a way that feels genuine and unforced?
From early Roman advertisements to the latest Twitter blast, loyalty programs’ need to adapt and change with consumer habits has never been more urgent.
And at a time when personal data sharing has become so complex and advanced facial recognition software can match a consumer to their Facebook profile based on their eyebrows alone, shopper privacy is also a top concern. Will marketers abuse the power consumers and technology have jointly given them? This is a critical issue affecting all aspects of customer loyalty and a topic I will address in future blog posts.