1to1 Magazine Demo

CASE STUDIES: BEST BUY | TULLY’S | MOTHERS WORK Loyalty at Work Three companies use innovative rewards programs to build loyalty. Marketers Ignore Customer Loyalty Best Buy Gets Into the Zone % of Marketers % of budget spent on loyalty 0–10% 11–20% 16.7% 14.1% 12.5% 9.6% 4.5% 5.8% 5.8% 1.2% 28.3% p ity the company that’s so thoroughly penetrated customer awareness that there seems to be nowhere left to go. The likes of McDonald’s and Starbucks have become so ubiquitous that their names now serve as shorthand for overexpansion. Which raises an interesting question: When you’ve achieved 100 percent brand awareness, what do you do for an encore? Such was the issue facing big-box retailer Best Buy. “As we got bigger, there were fewer customers who had not been exposed to Best Buy in some way,” says Matt Smith, vice president of financial services marketing. “Our population of prospects was shrinking quickly, and we needed to find other places [from which] to drive greater revenue.” Enter the Reward Zone program. Previously a simple points program—that had cost $9.99 to join—Reward Zone is now actively used to mine customer data and serves as a launching pad for additional loyalty and rewards programs. It’s also now free to join. “When Reward Zone went free about 18 months ago membership jumped from about eight million to just shy of 30 million now,” Smith says. Today the RZ website “is constantly updated, and we’ve upgraded the Best Buy website to promote the program. We’re also working more to connect the online and offline channels with instore promotions and by leveraging our Sunday circular, which reaches 50 million households a week.” 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% 91–100% 45% of marketers use less than 20% of their marketing budget on customer loyalty. 9% Source: The CMO Council “When Reward Zone went free about 18 months ago membership jumped from about 8 million to just shy of 30 million now.” Customers are also finding their own way to the content, he says, noting that when the RZ site relaunched as a free site, it attracted some 1,500 customers having 600 different dialogs with Best Buy staff within the first 45 days, via nothing more than a tab on the Best Buy website. Now starting to collect customer preferences online through the RZ site, Best Buy is spinning off “sub clubs” aimed at particular subsegments of customers. In the past year the company added a bonus-points program for customers’ birthday months, as well as a Racing Club, with access to NASCAR promotions, a blog by Best Buy–sponsored driver Elliott Sadler, and, when Sadler wins a race, bonus Reward Zone points. On the drawing board are subsites devoted to family and technology, and a green-oriented site. According to Smith, offering such sites, and continuing to track customers’ behavior, will inform Best Buy on how often to communicate with customers, via what channels, what kind of information, and whether they’d like to gather all supplemental materials like manuals and firmware online. “We want [RZ] to be a place that’s truly representational of the engagement with our products and services,” he says. The company is also trying to engage customers in more one-to-one conversations. Unica’s Affinium Suite helps to target marketing messages by customer preferences of what they want to receive. The company is also beginning to more closely examine behavioral data and purchasing activity to spot trends and opportunities. One segment, for example, buys iPod accessories 45 to 60 days after an iPod purchase. But another segment of iPod purchasers buys the same accessories within 30 days, including the day of the iPod sale. “We’re learning to flex the message to those segments, as well as having better timing when we talk to them,” Smith says. “When you have a big brand it’s sometimes hard to know how customers perceive the brand, both on a broad scale and at the individual point of contact.” Best Buy is examining ways for its stores to talk with its local communities in a relevant way. For example, “we might start offering in-store or even offsite events to provide training information on digital TV conversion in a non-sales environment,” Smith says. “There’s a lot of power we’re trying to figure out how to unleash.” > Kevin Zimmerman ONLINE EXTRA: Read more about how companies are applying rewards to long-term loyalty. www.1to1media.com/links/rewards.html 12 1to1 magazine www.1to1media.com http://www.1to1media.com/links/rewards.html http://www.1to1media.com

Table of Contents Feed for the Digital Edition of 1to1 Magazine Demo

1to1 Magazine Demo Contents 1to1media.com Editor's Note Feedback Putting Care in Patients' Hands Loyalty at Work Redefining the Contact Center Agent Introducing Enterprise 2.0 Cigna Dental Drills for Loyal Customers On the Beat 19 Ways to Succeed Miami Heat Schools Its Staff on Sales and Service Marketing Lends a Helping Hand More Than Meets the Eye Customer Service by Committiee Textron's Business Soars by Tracking Customer Loyalty Resources Contact Center Agent as Trusted Advisor Mastering Global CRM Face to Face with Don Peppers and Martha Rogers, Ph.D.

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