New School Incentive Programs: Data, Insight, Sustainable Behavioral Change  

    Since the launch of S&H Green Stamps in the 1930’s, loyalty marketing has blossomed into a $4 billion industry. And while the traditional collect now/redeem later points scheme had proven effective for years, social media and new technologies have made it well within the capability of marketers to use data intelligently to build strong customers relationships and gain a long-term sustainable advantage.

    As I explained recently on, this shift is moving the market away from the old school mentality of looking at what their “customers have done for me.” Traditional cookie-cutter loyalty programs were focused on the short-term developed either as a defensive strategy or in hopes that they could incent a certain (usually not measurable) behavior.

    Instead, the market is rightfully evolving to a new school mindset that is focused on data, insight, and sustainable behavioral change. In this new customer centric world we live in, actionable insight that can effectively drive sustainable behavioral change is the “caldron call” of the market, it is the areas where brands are asking for “help.” To sum it up, the new school mindset focuses on two key elements: transparency and relevancy.


    Today’s customers want their brands to be vulnerable and almost compliant to them. They want to know that if the brand makes a mistake they recognize it, are accountable and address it in a pro-active manner to the individual to restore effective engagement. Brands cannot be afraid to show the good, bad and the ugly. They need to have a free-flowing two-way conversation—- letting their customers vent or praise and then letting customers know they’re listening and that they care and most importantly respond relevantly to them in the time, medium, and message they require.

    Southwest Airlines recent incident with famed filmmaker Kevin Smith is a great example of leveraging the transparency of the web. When Southwest escorted Smith off a flight because they claimed he was too heavy for a single seat ticket what did Smith do? You guessed it. He pulled out his cell phone and tweeted about his experience—- venting his anger and frustration throughout cyberspace.

    While this would have been a public relations nightmare for many brands, Southwest Airlines makes it a practice to respond quickly enough to customer complaints in order to turnaround an otherwise disastrous situation. In fact, upon learning about what transpired with Smith, Josh Neal, product marketing manager for Southwest Airlines, sent a plethora of tweets to Smith acknowledging the incident while reinforcing Southwest’s commitment to customer satisfaction.

    This level of transparency sets Southwest Airlines apart. In 2007 the airline launched a proactive customer service communications department which measures customer experience system-wide and looks at pipelines where complaints could surface. They have a process for gathering facts and experiences, determining the validity of the grievances, and pinpointing what they should address. From there, they craft responses unique to each experience. As Fred Taylor, senior manager of the department, tells, (“Extreme Loyalty Requires Extreme Commitment,” February 15, 2010), the airline’s culture is centered on customer experience. In his messages to Southwest customers (which are disseminated within 24-48 hours of the experience), Taylor will:

    • Acknowledge the situation;
    • Apologize for the experience;
    • Invite the customer to fly again with Southwest;
    • Many times include a gesture of goodwill (such as a ticket voucher); and
    • Sometimes add a video that explains the situation.

    Southwest's proactive communications team receives positive feedback on a daily basis. Customers commend the company for recognizing mistakes and apologizing for bad experiences. According to Taylor, 70 percent of Southwest customers who receive proactive communications return to the airline and bring others with them. "We create a wow factor…and a positive storytelling experience," he said.


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