How Rewarding Customer Interactions Can Build Loyalty

REWARDING
INTERACTIONS
ARE YOU READY FOR
CUSTOMER INTIMACY?

INSIGHTS

Cindy Faust, Vice President,
Global Product Marketing
Mark Sage, Director,
Global Loyalty Product
Paul Sage, Product Management Director,
Loyalty Management Systems

B / Rewarding Interactions

PEOPLE

BETTER
RESULTS

PLATFORM

On your journey from chaos to competitive edge, Aimia unites unmatched global expertise with our
highly configurable secure loyalty platform to give you a loyalty advantage unlike any other.
To see how our loyalty insights can deliver results for your business, contact business-development.us@aimia.com.

aimia.com
© 2014 Aimia Inc. All Rights Reserved.

Rewarding Interactions / 1

AUTHOR’S NOTE

Money can’t buy love, but loyalty marketers have
always counted on bestowing points on those who buy,
and they in turn use points on rewards. By doing this,
companies hope consumers will return for more… and
more. But offering rewards for purchase behaviour —
“Buy this, and I’ll give you that,” — is no longer enough
in a competitive marketplace where products are
commoditized and loyalty programs are ubiquitous.
Behavioural measurement is at the core of loyalty
programs and is as valuable today as ever, but…
it’s not enough.

In a competitive market where loyalty programs are
ubiquitous, brands must set themselves apart to drive
customer experiences to build real relationships. It’s
about distilling smart, customer-centric data to deliver
a customer experience that not only rewards them, but
transforms them into brand ambassadors.
We believe marketers need to look at the customer
more holistically — across all interactions and across
the purchase cycle — to better shape the customer
journey and drive brand loyalty. In other words,
organizations must find creative ways to use their
loyalty programs to foster attitudinal loyalty; to build
and capitalize on the emotional connections engaged
customers have with their preferred brands.
Real loyalty isn’t just created at the checkout counter,
but at every touch point, before and after purchase. If
you want true customer intimacy instead of a quid pro
quo, you must reward these interactions — not just the
transaction. Gathering and analyzing interaction data
helps develop a holistic, real-time view of the customer
throughout the buying cycle, not just at the point
of purchase, and on multiple channels from in‑store
to smartphone apps. Who will have the ultimate
competitive advantage? Those companies who build
trust with consumers and provide better experiences
through the use of multi-dimensional insights at pivotal
moments in time, beyond just the transaction.
— Cindy Faust, Vice President,

Table of Contents
1 Author’s Note
2 Introduction
4 The Power of Social, Mobile and Digital Interactions
6 Beyond Transactions: The Benefits of Adding
Interaction Data
8 The Loyalty Challenge: Connecting the
Cross-Channel Dots
10 Motivating Consumers to Share Interactions:
Utility and Relevance

12 Motivating Consumers to Share Interactions:
Using Additional Currencies for Recognition
14 Motivating Consumers to Share Interaction
16 Taking Control: Customers and Their Data
18 Conclusion: Breaking Through to Customer Intimacy
20 About the Authors


2 / Rewarding Interactions

INTRODUCTION

By some measures, loyalty programs
have never been more beloved:
According to a new study by
Nielsen, nearly 60 percent of global
respondents said loyalty programs
were available where they shopped,
and of those, 84 percent were more
likely to visit those retailers. But
according to the Accenture 2013
Pulse Survey, in the US, customer
satisfaction fell by one percent since
2012. Additionally, the rate of loyalty
rose just one percent and customers’
willingness to recommend a company
rose by just two percent.

a temporal view of the customer over
their “lifetime” to measure the real
incremental value of marketing spend.
In a competitive market where loyalty
programs are ubiquitous, brands
must set themselves apart to drive
customer experiences to build real
relationships. It’s about distilling smart,
customer-centric data to deliver a
customer experience that not only
rewards them, but transforms them
into brand ambassadors.

Focusing primarily on transactions
means that loyalty programs typically
don’t reward or communicate with
This dissatisfaction can be a true
members, in real time, during the
loyalty crisis, one we believe is due
many non-purchase moments when
to the transaction-based focus of
a customer is actually interacting with
most loyalty programs, particularly
the brand — whether she is searching,
those which put the emphasis on
overarching data points such as total sharing, linking, comparison-shopping,
commenting, asking questions,
spend or campaign ROI rather than
or actually using the product and
looking at the customer holistically.
recommending it to others.
As shown on the following page in
the simple example from the Nectar
coalition program in the UK, looking In the Nectar example, this sort
of detailed knowledge on the
at one offer and campaign ROI at a
transaction is illuminating, but there
point in time does not tell the true
is still a challenge. The customer
story from a customer perspective.
is viewed one dimensionally… as a
customer at point of purchase. We
Loyalty programs enhance campaign
can’t see the decision process that
management measures by enabling
customer has gone through to put
the items in her basket, or what
happens after her purchase. Did the
customer even like the products
when she used them? We have to
infer information at just this one
moment in time when they transact.
Interactions can help us get a better
view on these gaps in knowledge.
Unfortunately, that means a true
interactive dialogue, which leads to
deep customer insights across touch
points, is missing. In fact, according
to a 2012 Acxiom/Loyalty360 study,
while marketers said one-to-one
marketing was one of their most
often-used customer retention
initiatives (used by 64 percent),
only 8.7 percent of them use data
insights to personalize loyalty
program rewards and offers.
Aimia’s previous Retail Brief,
Inflection Points: Seizing the
Moments of Customer Loyalty,
discussed the importance of

10 essential customer interaction
moments, including the consumer’s
first encounter with a brand, through
her first purchase, at each touch
point she encounters in a loyalty
program, as well as each postpurchase service encounter. On
the one hand, loyalty program
owners know these interactions
are important: When Aimia asked
in a 2013 poll why companies
would want loyalty programs to
focus more on interactions, the
overwhelming response (77 percent)
was customer engagement.
Loyalty currency rewards can induce
customers to interact. The challenge
is to reward non‑earning interactions
with loyalty currency sustainably. We
believe marketers don’t yet truly have
a way to value these interactions
or a simple way to gain access to
them. Nectar rewards a non-earning
interaction of internet search. It’s
through detailed customer analysis,
predictive modeling and a constant
reward adjustment that enables this
interaction stream to be rewarded
sustainably and to eventually become
a significant additional revenue
stream to that program. Internet
search is just one data source, and no
one data source provides a complete
picture of customer behaviour.
Ultimately, the power to influence
loyalty comes from connecting the
dots across a variety of data sources
and interactions — particularly social
interactions. Marketers’ first tentative
steps have been to focus on the idea
of “opting in” — allowing consumers
to choose to share their interactions,
transactions, and viewing habits
in exchange for rewards. The next
logical step should be to recognize
and reward customers differently;
for example, when they check in at
the store and then make a purchase,
or when they make a purchase
and then discuss it on Facebook.
This is not consistently happening
in loyalty programs.
In this edition of Insights, we’ll discuss
the benefits of adding interaction
data and tying it in with transaction
data to boost loyalty and foster
intimacy with engaged customers.


ARE YOU MEASURING THE RIGHT THINGS?

BUTTER

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23%

SKU
Sales Lift

New customer
response

+503%

20%

SKU
Sales Lift

OFF
50%

+196%

New customer
response

51%

Existing customers
increasing spend

56%

Existing customers
decreasing spend

Positive
Return

Negative
Return

Example: Nectar Coalition

The transaction
knowledge is illuminating,
but there is still a challenge. The
customer is viewed one dimensionally…
as a customer at point of purchase.
We can’t see the decision process that
customer has gone through to
put the items in her basket,
or what happens after
her purchase.



THE POWER OF SOCIAL, MOBILE
AND DIGITAL INTERACTIONS
Nearly 45 percent of all US adults
have adopted smartphones —
up 10 percent since May 2011.
Facebook reached a whopping one
billion active users in October 2012.
Artisan, a mobile app creation
firm, found that 71 percent of
retail executives surveyed believe
that homegrown mobile apps will
offer the single most important
customer touch point within one
to three years. So the fact that
social media, mobile, and loyalty
are inextricably linked is old news.
But loyalty programs still tend
to be kept separate from social,
mobile, and other digital interaction
tracking, without any real-time
feedback mechanisms, so marketers
haven’t yet been able to fully
take advantage of the power of
rewarding social interactions.


preferences. Through analysis, you
will have the ability to target key
influencers and those who are loyal
to extend the reach of targeted
communications and amplify the
message, leveraging social graphs
and targeting communications to
“a segment of one.” If someone in
the target member’s social network
simply shares information about
promotions, they receive points
at increasing levels depending on
uptake as it expands through the
chain. A purchase in that chain of
sharing increases the interaction
earning throughout the social
network of influencers. This is also a
much more intuitive way to deliver
the “member get member” activities.
Don’t ask your members to get
another member. Make the offer
open to all via their social networks.
Non‑members get a chance to sign
up by opting-in to the offer and
And there is tremendous opportunity the brand can reward the original
member with points and status.
for the marketer who can take
advantage of social and mobile
Brands that combine technology
interactions and tie them into
and expertise to harness interactions
essential transaction data analytics
taking place on social networks and
efforts to get a total view of the
on mobile devices will be able to
customer. The Aimia/Columbia
offer better customer support, higher
Business School study found
perceived value, and more positive
60 percent of M-Shoppers are
customer experiences, all of which
more likely to buy a product while
lead to greater customer intimacy. By
in the store when they find online
motivating customers to connect their
reviews on their smartphone while
social networks to loyalty program
55 percent are willing to sign up for
memberships and/or encouraging
a store loyalty program in order to
mobile engagement through a reward
gain benefits on their smartphone
while in the store, and 31 percent are program app that uncovers location,
offer response, and even in-store
interested in interacting with a store
behavioural data, marketers can
on social networks like Facebook.
gain tremendous insight into how
The key to leveraging both properties these interactions influence purchase
decisions. They’ll also learn how to
is to overlay the social graph of
present offers that enrich the entire
each individual with the detailed
loyalty program profile and customer customer experience.
These days, customers spend more
and more time online researching
options, reading reviews, and
gathering information before ever
setting foot in a store. A 2013
Aimia/Columbia Business School
study, Showrooming and the Rise
of the Mobile-Assisted Shopper,
found that 21 percent of consumers
are M-Shoppers — they use mobile
devices while in retail stores to assist
with their shopping decisions. In
addition, once they have purchased
a product or service, consumers
are now accustomed to giving
feedback to their social network
connections about their experience
and interactions with a product.
The pre-purchase social discovery
period and post-purchase advocacy
(or non‑advocacy) have become as
important to the process of building
loyalty as the purchase itself.


REWARDING INTERACTIONS TAKES TIME
AND PROPER ANALYSIS

AMANDA

Amanda buys
offered product
and achieves
(John 50 Points)

opts-in to offer
(John 5 Points)
Amanda
shares offer

New member and
new influencer:
Sharing is treated
as a form of
member-get-member
activity while sharing
valuable offers

JOHN

is targeted
based on social
graph and loyalty
profile as an
influencer

John shares a
social offer

SUSIE

WENDY

looks at offer,
but does not
opt-in

Susie
shares offer

opts-in to offer
(Susie 5 Points)

MARK

opts-in to offer
(John 5 Points)

Mark does not
buy product
(John keeps points)

Number of Interactions

Ramp-up period to sustainability for rewarding
interactions not transactions

Number of Months

Facebook message

Loyalty web message


BEYOND TRANSACTIONS: THE BENEFITS
OF ADDING INTERACTION DATA
Transactional data is the final proof
of purchase, and always will be
essential to prove the incremental
revenue and profit that a program
delivers. Loyalty marketers have long
understood the power of rewarding
at the point of purchase, and the
loyalty industry has always been at
the forefront of data analytics. But
the true potential of big data lies in
going beyond transaction data, to
include data points or observations
from customer interactions
throughout the purchase cycle to
create a richer view of the customer
over time. This combination, we
believe, will power-charge loyalty
programs into the future.

the point of purchase creating
Data can be gathered from a variety
of consumer interactions — from
sustainable incremental lift with
loyalty programs, web analytics,
a consumer beyond ROI on a
shopping baskets, social media,
campaign. Loyalty programs can
mobile, CRM, and third parties.
become the enablement of a
These cross‑channel data sets can
customer lifestyle journey.
help illuminate, anticipate, and
reinforce purchase behaviour, as the
> Leverages and validates
insights they yield provide levers to
investments in new communication
reinforce positive relationships and
channels. Marketers need to
boost long-term loyalty. That said,
reach today’s consumer where,
customers don’t think of themselves
when, and how she wants to
as transaction‑based robots that
be reached. Today’s Millennial
are only worth a second look in the
consumers are greatly influenced
checkout line. Consumers experience
by mobile and social channels,
an entire purchase-related journey
while Generation X is more likely
from the moment they recognize
to use a mix of traditional and
the need to purchase something,
cutting-edge channels. Harnessing
through the research and search
unstructured interaction data
process, to shopping for, choosing,
points across internal business silos
buying and actually using the
into the loyalty program enables
product, and possibly recommending
a bi‑directional communication
it to others or sharing the experience
with the consumer throughout
with the company.
the purchase cycle. Experience
suggests that linking consumer
Transaction data is just the buying
segments to their true acquisition
of the product or service which is a
and influencing sources and
very small moment in time to build
actual usage/endorsement post
customer relationships. It is the
purchase, delivers better return
interactions, tied into those transaction
on investments and ensures a real
data points, which can create an entire
contribution to the business.
customer profile that leads to true
customer intimacy. There are several
important benefits of ultimately
adding interaction data to the mix:
> reates new revenue streams.
C
Customer data has been called
“the new oil” from which
marketers extract, process,
and refine information into the
fuel that runs their company
operations. Interaction data is an
untapped resource, and there is
new revenue stream value in the
interactions themselves.
> rives incremental revenue
D
from the loyalty base. Tying
interactions to transactions
creates a three dimensional,
customer‑centric view beyond


> owers the cost to serve, while
L
increases value. Seeing the
consumer holistically through
interactions and moving from
the one-dimensional view of
loyalty, we are now supporting
the consumer on her lifestyle
journey. Extending beyond the
brand enables a wider array
of partnerships to be formed,
lowering the cost to run the
program while increasing value to
the consumer. In addition, bringing
new types of loyalty currencies
into the mix can influence
customer behaviour while lowering
the points liability to the program
through greater redemptions
and engagement.


BENEFITS OF ADDING
INTERACTION DATA

Creates new
revenue streams

Drives incremental
revenue from the
loyalty base

Leverages and
validates investments
in new communication
channels

Lowers the
cost to serve, while
increasing value



THE LOYALTY CHALLENGE:
CONNECTING THE CROSS-CHANNEL DOTS
Marketers understand that no single
channel drives loyalty. Consumers
see brand advertising on and offline.
Consumers conduct product research
by reaching out to friends socially
before they shop or while looking
at brand web sites. Consumers
visit stores to research a product
before searching for a lower price
comparison and using coupon “apps.”
In this environment, a silo-driven
channel mindset no longer works. By
combining insights from transactional
analysis with data points from the
entire purchase cycle (e.g. Groupon®,
SEO, Google Remarketing, online
reviews), marketers can infuse loyalty
programs with these cross-channel
experiences. However, companies
need technological solutions capable
of collecting and connecting these
data dots into useful, real-time
recognitions — ones which can
seamlessly connect into different
social networks.

There is an endless array of
questions that marketers want to
answer in order to get “closer to the
customer.” Some answers are now
available because of mobile and
social technologies and consumer
behaviour in their view of sharing
their interactions.
Keep in mind that customers already
measure themselves in terms of a
wide variety of activities, from health
and wellness to finance. For example,
MyFitnessPal is an app that measures
food intake. Fitbit® is a small device
and app that measures movement and
sleep. RunKeeper measures exercise
routines, while AskMeEvery measures
moods like a mini-diary log. Many
customers have no problem sharing
information with their iPhones, via a
plethora of apps and with social media.
However, there are two challenges
for a marketer: How to motivate
consumers to share their relevant
interactions across channels
throughout the buying cycle at the
pivotal moments and how to have the
technology capable of collecting and
connecting the dots from interactions
into capabilities that can be acted
upon in real time.
For many organizations, social media
and digital strategy activities are
separate from their more traditional
loyalty efforts. The temptation
for marketers is to simply import
interactions into an existing program
and reward the consumer with a few
points for checking in or send the
consumer an offer while in a store.
But if the reward is not linked to the
customer’s actual journey or profile, it
can actually erode value and increase
complacency. Instead, building loyalty
with today’s consumers, especially
Millennials (consumers between


the ages of 20 and 30), requires a
reciprocal “conversation” driven from
a complete view of the customer
relationships with the brand, their
journey and “friend” networks.
Connecting the dots with interaction
data at every stage may still be in
the future for most companies —
but rewarding and recognizing best
customers throughout the purchase
cycle should be the goal of every
loyalty marketer today.
We see adding social data as one of
the key pillars of better loyalty, but no
one data source provides a complete
picture of customer behaviour. We
need to be able to connect the dots,
so we can recognize a customer
differently — across the purchase
cycle — when they check-in in-store
and then go on to make a purchase,
or when they make a purchase
and then share it on Facebook,
for example. We need solutions
capable of collecting and connecting
these dots into useful, real-time
recognitions, and solutions that can
seamlessly connect into the different
social networks that exist today and
are coming tomorrow.
New loyalty platforms and solutions
hold the potential to take interaction
data and turn it into the fuel for
sustainable, reciprocal, and strong
customer relationships. And any
technology should be focused on
seizing the moments to create
the optimal customer journey and
providing a value exchange that
encourages engagement.
The world is changing quickly
and customers have increasing
expectations around their experience…
and marketers need to be ready
to respond.


CONNECTING DOTS SOCIALLY
IS CHANGING LOYALTY

Re-marketing data
is an additional
data source for
offer targeting

The loyalty model
has an expanded
ecosystem of brand
interactions across
traditional and new
platforms and channels
— all shared socially

Customer purchase
information is tracked
with loyalty token

Customers are
motivated to provide
data, link data sources
and identify themselves
on interactions

Coupon selection
helps with targeting
compelling, yet
sustainable offers

Linking Foursquare
provides insight into view
vs. buy inside and outside
the program

Linking search provides
ability to target more
relevant offers
Linking Facebook
provides friend and
preference information



MOTIVATING CONSUMERS TO SHARE
INTERACTIONS: UTILITY AND RELEVANCE
Customers want every touch point
to be useful, relevant, and seamless
— in short, friction free. Finding
ways to make it easier for your
customers to do business with you
can be a uniquely powerful driver
for gathering interaction data. This
requires new ways to motivate
customers to share information
with you, to make it easier for them
to do business with you, and to
make interactions more relevant —
reducing friction.

Technology companies have been on
the forefront of reducing friction. For
example, payment company Square®
is focused on creating “frictionless
commerce,” founder Jack Dorsey
told Slate. Square’s long-term aim, he
says, is “to make accepting payments
a breeze for businesses, and... to
make paying for stuff invisible — for
everyone, across the entire economy,
for all types of goods and services.”
The current Square app, installed on
the user’s phone, allows the merchant
or restaurant to simply see the
customer, click on his or her photo, and
authorize payment. There are no cards,
no PINs, just a simple, quick exchange
that offers frictionless utility.
Loyalty marketers are catching on
to the idea of keeping interactions
simple and seamless: Starbucks®,
for instance, offers a great example
of a company beginning to
understand how to support the
customer’s entire buying journey
with a friction‑free experience:
> Improved acquisition quality
and improved enrollment/new
member experience.
> Starbucks offers offline brand
awareness with stores, cups, and
every item in the store. All social
media and digital access points
reinforce the same message.


> Customers can find the outlets
through research instantly.
> App supports customers’ needs
in real time before they are in
the store.
> Rewards card supports pre‑purchase
because customers can preload
value. Square customers don’t even
need an account.
> At purchase, customers can buy
instantly with the Starbucks app or
Square — it’s all the same to them
from an ease-of-use perspective.
> Customers are rewarded with
points and encouraged to share
the joy with all their friends socially
post-purchase.
> Then, the process repeats for
incremental sales and profit.
Reducing friction in customer
interactions can bring customer
intimacy to a whole new level: By
making interactions seamless and
simple as well as useful and relevant,
customers will be motivated to share
more of those interactions. And the
more they share interactions, the
more a marketer can learn about their
wants and needs and how to make
the customer journey even more
friction free.


THE WORLD IS CHANGING
In today’s environment, interactions with brands are as important as transactions and span the purchase cycle.
Loyalty is changing as it now means wherever you go and whenever you want it.

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INTERACTIONS: USING ADDITIONAL
CURRENCIES FOR RECOGNITION
As we see in airline frequent flyer
programs, tiering within the program
develops the feeling of belonging,
achievement, and respect which are
essential to the program’s success
in maintaining their best customer
segments. Social currency in the
form of recognition — making a
person feel like she belongs — is
the equivalent of the tier mechanic
for new online models and is a
fast‑growing phenomenon in the
world of loyalty. Loyalty is no longer
just about being rewarded; it’s
about being recognized particularly
by peers and social groups that
a person cares about. In order to
leverage customer interactions,
there needs to be a new value
exchange. Product influence,
special content access, virtual
badges, status rankings, or exclusive
communications are all rewards for
interactions that are based on more
than just tangible cash or prizes.
Recognition is a new reward of
choice to add into the mix.

According to mobileYouth®, a
research advisory firm, recognition in
the form of social currency consists
of “things that help me belong” and
“things that make me significant.”
Unlike tangible rewards such as cash,
which typically have personal value
and are designed to make recipients
feel special, social currency instead
is about making the recipient “look
special” to others within the dynamic
groups and networks each consumer
is building in their online and offline
interactions. If social interactions are
exposed to other people — whether
on Twitter, Foursquare, Facebook
or LinkedIn® — they attract implicit
or explicit visibility to the dynamic
groups the customer prefers.
Social currency also taps into
the fast-growing phenomenon of
the gift economy — an attitude
prevalent among, but not limited
to, Millennials. This generation
doesn’t have the wealth or income
of previous generations, but it
does have a great deal of comfort
with online resources, and readily
embraces shared or borrowed items,
such as municipal bicycle programs.
Currently, the “sharing economy”
as it was called in a BBC report,
is small: The BBC puts its value at
$US 3-4 billion, but claims that figure
could quadruple during the next
five years. Furthermore, Imagination
for People, an organization that
trumpets creativity as a source of
ideas for public good, says that
gifting, sharing, and other aspects
of what it terms “collaborative
consumption” represent “a new
economic model.”
The idea behind these concepts is
simple enough: It’s about connecting
people directly with other people
to exchange goods and services,
whether it’s borrowing a car for
the day (RelayRides) or a room for
the night (Airbnb), or exchanging
promotion codes. The question is
whether loyalty marketers can turn
this sharing/collaborating instinct into
activities that benefit both their own


data‑gathering needs as well as their
customers’ wants.
Gift economies are much more
focused on relationships and sharing,
and are typically between friends
or close communities. In a gift
economy, it’s not the value of the
gift or the expectation of return that
is important. For loyalty programs
looking to gather interaction
information, it’s essential to create an
emotional connection with members
that transcends the basic transaction.
For example, the Pampers Rewards
program is not just about diapers.
Its about the journey of being a
mother and the emotional connection
with the brand that results from
the program’s value, which extends
beyond discounts. The program
allows mothers to track and celebrate
milestones; ties promotions and
offers of lifestyle items such as child
development toys, gift cards, or
charitable donations; and provides
opportunities for many interactions
with the brand and others in the
community, as mothers tackle the
challenges of raising children together.
Members get social recognition or
social currency from sharing, as well
as bonus codes they can give out
or share with others. Twitter parties,
Facebook sharing, and community
advice are all just part of the entire
journey facilitated by the program,
which reaps tremendous insights
about its member base that
it can use to boost long-term
customer loyalty.
1.7 million Facebook fans and all
their friends are exposed to the
Pampers loyalty program, with an app
publishing strategy that delivers 10x
better response rates than other online
tactics. And through this one slice
of information, the lifetime value of
Facebook app users can be measured
for how they interact with the Pampers
brand in that forum, as well as their
re‑engagement rate. These are just a
sample of the insights gained from
one small piece of a larger strategy.


MAKING THE EXPERIENCE MORE REWARDING,
LASTING, AND FUN FOR MOTHERS

Enroll and Welcome

Rewards, Promotions,
and Charities

Promote and Offer

Capture Purchases

Sharing and Rewarding
via Facebook

Targeted Offers

Members Engage Others
via Twitter

Partners and Progress
Tracking



INTERACTIONS: GAMIFICATION
In order to start rewarding
interactions in real-time, loyalty
marketers need a new approach to
leveraging and gathering data. The
combination of game mechanics
and big data offers a tantalizing
mashup for today’s loyalty marketers.
According to a survey released in
August 2013 by Monash University’s
Australian Centre for Retail Studies,
national retailers are increasingly
incorporating gamification elements
to make their progress more
appealing to fickle consumers who
have multiple digital and offline
channels at their disposal.

Traditional loyalty programs
typically have only one or two
gaming mechanics — points and
tiers. Additional game mechanics,
such as badges, levels, check-ins,
and progress bars, can now help
drive a wide variety of behaviour
changes on social networks, on
mobile apps, and websites. These
features help marketers engage
with consumers and motivate and
encourage them to share interaction
data, which will lead to true customer
intimacy and loyalty.
My Starbucks Rewards™ offers
an example of a program that
uses gamification tactics to boost
the customer experience and tie
interactions to its loyalty program.
Players register for My Starbucks
Rewards through an app, and each
time they purchase a Starbucks
product, they accumulate stars, to
earn benefits such as birthday gifts
and personalized offers. There are
three “levels” depending on the degree
of user loyalty: Frequent visitors get
awarded with a level upgrade.
The following page represents a simple
example of a Foursquare badge for
Starbucks that incorporates many of
the elements in one communication.
1. Social Currency. All my friends see
my badge and the badge is not
points, it’s status.
2. Gift Economy. It encourages me to
share and buy my friend a coffee.


3. Relevant and Useful. It’s relevant
and useful because I’ve just
checked in at the coffee shop
after five visits and unlocked the
badge for status — and by doing
so, I get a benefit that I can share
with my friends.
Starbucks is clearly a brand that
understands how to use game
mechanics and their business
results reflect this understanding.
According to the October online
issue of Marketing Week, Starbuck’s
recent analyst report outlined
plans to enhance mobile, digital
and loyalty operations as they
look to secure future sales in a
highly competitive coffee market.
They are adding new features
to My Starbucks Rewards, and
the company wants the rewards
program to establish a “Starbucks
currency” that can be used across
multiple platforms to build more
loyalty customers.
Starbucks is also planning updates
to its mobile apps, including
mobile ordering and digital tipping.
Howard Schultz, chief executive of
Starbucks, as saying that “no single
competency and capability had
amplified the brand more than its
investment in all three platforms.”
The announcement came in the
same week the brand began
allowing customers to buy coffees
for a friend via Twitter. This is being
tested in the US.


STARBUCKS INCORPORATES
MANY OF THESE PRINCIPLES

Social
Currency

Gift
Economy

Relevant
and Useful



TAKING CONTROL:
CUSTOMERS AND THEIR DATA
Building intimacy means creating
a trusting, safe environment where
both parties can share freely.
It remains to be seen whether
consumers will feel comfortable
sharing increasingly personal
information for added benefits
and rewards or whether they will
choose to clam up due to concerns
about privacy and safety. According
to Aimia’s 2013 Loyalty Lens, the
18-24-year-old cohort is more
likely to share a wide range of
information online (45 percent)
versus the older cohorts, which are
more guarded (just 26 percent for
those between the ages of 55-64).
But no matter what the age, we
believe two primary variables are at
play when it comes to motivating
consumers to share interaction data
over the long haul:
> Control: Do consumers have
perceived control over the use
and “ownership” of their data?
> Engagement: Will marketers
use data wisely for long-term
relationship building, or will
they focus on short-term
promotional activity?

In the past, consumers didn’t deeply
consider how the data they gave
to websites would be used. That,
however, is starting to change. Online
consumers are gaining more control
of their brand experiences and
exercising power over their own data.
For example:
> hey limit what marketers can learn
T
about them online. Web browsers
are including do-not-track tools to
enable consumers to lock down
what can be shown within their
browser experience.
> hey control the online messages
T
they see. Facebook provides a
one‑click solution to consumers
to hide any brand messaging
they don’t like, even if they have a
previously established relationship
with that brand.
> They can avoid television advertising
altogether. On‑demand services
like NetFlix, Spotify®, or simply a
home personal video recorder are
enabling the consumer to opt out of
advertising completely.
> They can prevent direct mail from
reaching their mailboxes. Outbox
— a Texas-based start-up — allows
consumers to filter their direct mail,
with options to have unsolicited mail
or mail from known brands (using
logo recognition) thrown away.
Your marketing efforts will be
compromised unless you support
proper data use.
Aimia has developed a framework
globally called TACT to support


the need customers have about
their data. Marketers looking to
glean interaction data from their
customers and gain trust from
your brand, should make sure the
following is at the heart of what
you do:
> ransparency: You must provide
T
customers with information on
the specific data being collected,
the manner in which it is being
collected, and how it will be used.
The language and access must be
in a consumer-friendly and easily
understandable format.
> dded Value: You must make your
A
customers aware that they’re being
compensated in a specific manner
for providing personal data.
Whether that compensation comes
in the form of loyalty program
rewards, partner benefits, exclusive
experiences, or other exclusive
information, this value exchange
must be made explicit.
> ontrol: You must give customers
C
control over the data they have
provided by telling them with
whom you’re sharing it and giving
them the ability to opt out of data
collection at any time.
> rust: You must give consumers
T
confidence in the security of the
data. Trust results from using
personal data only in the manner
in which you promise it will be
used, and by sharing it only with
partners named up front. You must
collect only the data you need,
and use the data collected to build
consumer value.


INTERACTING SOCIALLY IS BASED ON TRUST
Aimia’s TACT framework ensures customers are at the heart of what we do.

TRANSPARENCY
Customers have information
on what is collected, from
where, and for what purpose

CONTROL

ADDED VALUE
Customers understand
there is a value exchange
through recognition,
rewards, and offers

CUSTOMERS

Customers have control
over what they provide,
how it is used, and
how it is shared

TRUST
Comes from confidence that
data is held securely and used
in mutually agreed way



CONCLUSION: BREAKING THROUGH
TO CUSTOMER INTIMACY
As with any relationship, developing
intimacy isn’t easy. Humans have a
basic desire to belong and become
attached, but bond-building doesn’t
happen one-dimensionally with
just an economic proposition. This
is true with the brand-customer
relationship, as well: Getting close
to your customers means getting to
know them whenever and wherever
they interact with your brand, not
just at the checkout counter. But
this goal requires going beyond
the points and tiers of traditional
loyalty programs that focus on
purchases and transactions.
Companies are beginning to figure
out how to reward customers for
the important interactions that
precede and follow a purchase.
Brands are especially cognizant of
the social interactions that translate
to engagement and advocacy.
Whether customers are searching
online, commenting on Facebook
pages, or viewing YouTube videos,
adding their interactions to their
transaction data can help generate
the next level of customer loyalty.

Loyalty is changing. For customers,
it now means the experience they
have at any time they interact with a
brand, no matter when that interaction
happens, or through which channel.
And they expect those interactions
to take place when they want them,
not when a brand provides the
opportunity for them. Customers have
increasing expectations around their
experiences, and marketers need to
be ready to respond. Companies must
find creative ways to use their loyalty
programs to build and capitalize
on the emotional connections
engaged customers have with their
preferred brands. By looking at the
customer more holistically — across
all interactions and throughout the
purchase cycle — marketers can better
shape the customer journey and drive
brand loyalty.
To review, these are four powerful
pillars you can build to use
interaction data to create intimacy
and long-term loyalty:
> hink utility and relevance.
T
Customers want all aspects of
their dealings with brands to work
together seamlessly, without friction
and supported by data-based
decisions. If you can provide that,
customers are more likely to let you
capture the interactions that help
you fuel marketing insight, boost
segmentation efforts, and leverage
new communication channels.
> Recognition will reinforce loyalty.
Rewards in the form of cash or
discounts are no longer enough
in today’s loyalty landscape.
Recognition, which makes the
customer look special to others, is an
essential reinforcement, particularly
when it comes to sharing social
interactions with a brand.
> cale with new technologies
S
and methodologies. Combining


interactions with transaction data
requires new solutions, not legacy
technologies and budgets. For
example, your loyalty platform
needs to be agile and in the cloud
if you want to compete, because
the volume, velocity, and variety of
interaction data can’t be handled
with old tools and thinking.
> Remember that the customer
owns the data. Companies will
not succeed or build loyalty
by abusing the trust of their
customers. Seek permission, use
data transparently, and reward
consumers for voluntarily sharing
personal information. In return,
they will reward you by sharing
their experiences with your brand
and remaining loyal.
According to Rajat Paharia, author
of Loyalty 3.0: How to Revolutionize
Customer and Employee Engagement
with Big Data and Gamification,
loyalty is poised to go to the next
level: “What loyalty actually means
is that we have a relationship that
transcends the transactional; it’s
about something else. So what is that
something else and how do you drive
that level of engagement to escalate
that relationship?”
At Aimia, we believe that the
“something else” is the power of
customer interaction data combined
with transactions. Marketers are
close to being able to truly connect
the dots using existing technologies.
However, they need to proactively
position their businesses by placing
data and technology in service
of their customers. This is the
difference between using these
tools to spy on customers and sell
to them, and using these tools to
see the world through their eyes.
The latter is the key to loyalty
marketing success and developing
real customer intimacy.


Think utility
and relevance

Recognition will
reinforce loyalty

Scale with new
technologies and
methodologies

Remember that
the customer owns
the data



ABOUT THE AUTHORS

Cindy Faust, Vice President,
In her role as VP, Global Product Marketing,
Cindy provides leadership to drive the overall
go-to-market strategy for Aimia technology
products. Her role includes sales packaging,
client services strategy and the evaluation
of revenue-generation programs for existing
and new proprietary global products,
ensuring the introduction of new products is
coordinated across departments internally and
through external product launch to maximize
commercial success. In addition, Cindy focuses
on customer advocacy programs as well as
understanding and synthesizing customer
insights and market needs.

Mark Sage, Director,
Global Loyalty Product
Mark Sage is a subject matter expert and
advisor in the area of customer retention and
specifically loyalty marketing. He is a highly
skilled relationship marketing professional,
with a considerable range of best practices
and case experiences to contribute.
With a background in software systems
design and a passion for marketing, Mark
is able to unite the strategy and theory around
customer retention marketing with the art of
the possible regarding technical delivery.
Mark is a keen advocate of social computing
and the psychology of customer behaviour.

Prior to her current role, she was VP,
Product Management for the US region
and VP, Loyalty Technology Services,
delivering technical solutions for clients
in the financial services, travel and hospitality,
retail, CPG, telecom, automotive, pharma and
high tech industries. She joined the company
in 2005 with a focus on business development
for new loyalty programs. Prior to joining
Aimia, Cindy held various IT leadership
positions with Carlson Companies and
GE Capital ITS. She started her career at
Entex Technical Solutions as a consultant on
the American Express® account. Cindy has
earned various collegiate degrees including
an MBA from the University of Minnesota’s
Carlson School of Management.

Mark’s views on the future of loyalty have also
been published within a number of journals.
Mark is also a keen advocate of loyalty
marketing and maintains a popular blog which
discuss trends and thoughts on customer loyalty.
Mark has worked for Aimia for over 15 years
and has experience with technology
development, loyalty program design and
loyalty marketing.
He has gained extensive experience of
consumer-oriented marketing programs,
having implemented and consulted on loyalty
solutions for clients such as LTSB, Starwood®
Hotels, Best Buy®, Barclaycard, RBS, Brother®,
MBNA, First Data™, Visa® and Coca-Cola®.

Paul Sage, Product Management Director,
Loyalty Management Systems

brought on board three fully integrated loyalty
programs in CPG and retail during 2011 and 2012.

Paul Sage is responsible for product strategy
and positioning of Aimia’s Loyalty Platform
within the US region. Paul coordinates client
collaboration, market analysis, and industry
leader feedback to inform the global product
development of requirements for ongoing
investments in the Loyalty Platform. His
responsibilities extend to delivering sales tools,
product management processes, content, and
positioning for all aspects of the product.

Prior to Aimia, Paul was on the board of a UK
social enterprise organization supporting NGOs,
charities and not-for-profits in their efforts to
leverage social media to drive donations and
communications. As well, Paul is owner of a
UK marketing consultancy firm specializing in
securing government digital presences.

Prior to his current role, Paul managed the
IT architecture and consulting team in the
US region. As part of his responsibilities, he
repositioned the team to a product strategy
and sales engineering team which secured and


With two decades of international experience
Paul has worked extensively with marketing
services and data analytics organizations in
the United Kingdom, United States and Asia
for clients in oil and gas, financial services,
retail, high tech, government, non-profit and
CPG verticals.


EMOTIONAL
ENGAGEMENT

REAL
RELATIONSHIPS

HIGH DATA
CONTROL

About Aimia
Aimia Inc. (“Aimia” or the “Corporation”) is a global leader in loyalty management.
Employing more than 4,000 people in over 20 countries worldwide, Aimia offers clients,
partners and members proven expertise in launching and managing coalition loyalty
programs, delivering proprietary loyalty services, creating value through loyalty
analytics and driving innovation in the emerging digital, mobile and social
communications spaces.
Aimia owns and operates Aeroplan, Canada’s premier coalition loyalty program,
Nectar, the United Kingdom’s largest coalition loyalty program, Nectar Italia and
Smart Button a leading provider of SaaS loyalty solutions. In addition, Aimia owns
stakes in Air Miles Middle East, Mexico’s leading coalition loyalty program Club Premier,
Brazil’s Prismah Fidelidade, China Rewards — the first coalition loyalty program in China
that enables members to earn and redeem a common currency, and i2c, a joint venture
with Sainsbury’s offering insight and data analytics services in the UK to retailers and
suppliers. Aimia also holds a minority position in Cardlytics, a US-based private company
operating in card-linked marketing for electronic banking. Aimia is listed on the
Toronto Stock Exchange (TSX: AIM).
For more information, visit us at www.aimia.com.

YOUR
BUSINESS

RESULTS
DELIVERED

OUR
INSIGHT

With more than 4,000 talented professionals in 20 countries,
we can deliver results for your business using our loyalty insights. We see relationships differently.
Visit us at aimia.com.


How Rewarding Customer Interactions Can Build Loyalty

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