Hmmm… The article also touches on how this is extending to loyalty programs. I’ve tried to incorporate some of these elements into the programs for some of our clients, but I would never have set the expectation that these aspects alone would increase engagement to this extent, or that this type of lift is sustainable. I agree more with the VC quoted in the article, who says, “backlash is going to come from people who try to slap [game features on a site] without any understanding of how to bake it into the full experience.”

Coincidentally, several rewards programs of which I am a member sent messages around the same time, trying to engage recipients through contests and games. That presents a timely opportunity to consider how hard it is for these techniques to live up to their promise: that a member can get something of value simply for interacting with the program. To consider just a couple:

1. Priority Club Rewards. (This program is running a bigger promotion that I keep meaning to write about, because it is so confusing and so misleading… but that’s for later.) They’re running a trivia contest. Members who score in the top 50 daily will receive 5,000 program points, and the top 100 weekly entrants will receive 15,000 points. And those are real values, because free room nights start at 10,000 points, and there are $100 Amazon gift cards for under 40,000 points. So I could potentially get $25 in value just for playing, if I win. But… this program has millions of members, and not sure how many are going to play; I answered all the questions correctly, but still was ranked far below the prize threshold. So appealing in concept, but the concept of a leaderboard can also be discouraging: if it reinforces to a member that their chance of winning is very low, it may in fact deter them from participating again.
2. My Coke Rewards. This offer was just plain misleading, and other than getting a member to burn points, not sure the point. The pitch was “Instant Win” but successfully completing the activity you had to perform had nothing to do with the chance to win. For some number of points, you were offered the opportunity to kick a virtual field goal – and the tie to the brand was that you could kick a Coke can! It appears at first that a successful kick results in a prize, but in fact, it doesn’t matter whether you make the kick or not, you simply click a button at the end of the kick sequence to see if you won. So they’re making members work through an achievement that makes you think success leads to value, but in fact, simply delivers another brand impression.

Back to the VC’s comment: neither of these examples really integrates the game components into the overall program, and may be at odds with the promise of the program. Since you’re dealing with your most loyal customers, they may want to tie the gaming elements and related incentives to the next purchase, and personalize the experience based on what they already know about the member. Most importantly, make sure these “engagement” techniques don’t disappoint your members in what is generally a non-purchase setting, because you don’t know how that will impact brand affinity and purchase intent down the road.

-John Keenan

Under their old program, members received 20%… the first week of every month. I wonder how many times members purchased during the other weeks of the month? Probably not many. So they are moving away from that to a more frequent and personalized direct mail program, and reducing their reliance on the 20% off storewide offer.  The new VP of Marketing suggested that dollars off typically works better than a percentage discount offer, and is shifting towards that. Smart, because their initial tests showed they could reduce the average discount offered under this method, without reducing the average ticket.

Hopefully there will be a followup on how they’re doing down the road, because it will be interesting to see how things have progressed, and what learnings other retailers can gain from this attempt to break the discount cycle.

-John Keenan

It’s a fact of the female urban population—we carry bags. Not just purses, but small bags filled with extra shoes, lunch, or other work essentials.

Take a look around the next time you ride public transportation, and you will see a reoccurring trend—the small, reusable, red lululemon athletica tote. I can count 10 on each leg of my commute. The yoga apparel retailer was intuitive enough to know what every woman wants—an easy-to-carry, reusable bag that is the exact size of last night’s leftover pasta and a pair of high heels. Their blog reveals that this was no accident. Numerous posts discuss the perfect size of these bags and encourage readers to carry their totes everywhere.

Sure, it costs more to package purchases in quality, reusable materials, (although when leggings cost $100, who’s really counting?), but the brand exposure is priceless. As a matter of fact, I don’t think I’ve ever even made a purchase at lululemon. Yet somehow, I have three of these bags at home, and I carry one to work every day. I used to have five, and gave two away when some party guests went home with leftover dessert. So let’s say that each bag lululemon hands out sees three different sets of hands. Suddenly, a small number of loyal customers have lululemon smeared across half the bus routes in the city. It’s incredible how well thought out strategy can impact brand identity.

-Hallie Borden

First, the basis for comparison is way too small for a country this big.  Starbucks had the lead last week with just under 150,000 check-ins.  Across 15,000 stores, that would be 10 per week, or around 1 per day per location.  And McDonald’s was in second place, with around 50,000 check-ins.  Hardly meaningful, or representative in any way.

Next, from an analytic standpoint, even if the numbers were bigger, there are way too many external factors that make comparisons difficult, and the act of checking in through FourSquare is not a random event.  Weather, seasonality, economic conditions, smartphone adoption, age distribution, are among many factors that might impact rate of check-in, without regard to the popularity of the retailer.  So at minimum, they might need to provide a scale that normalizes the results, but otherwise, not really fair to compare McDonald’s and Starbucks.

Finally, what would a retailer do with this information?  I’m sure all of these retailers have transaction counts by day, so they already know how many customers came through their doors.  This type of chart then tells them how many were motivated to pull out their smartphone and call up FourSquare.  But not why they are there, how frequently they visit, who they are with, or what they are going to spend.  Given the current scale, and without some insight into intent, for a national retailer, there is no way to use this tool to have much impact on your customer base.

So maybe AdAge is simply ahead of their time.  Down the road this may be useful, but at a minimum, not until the adoption is (significantly) higher, and the retailers are providing much bigger incentives for folks to remember to check-in when they arrive.  And more importantly, until we find a way to track intent.

-John Keenan

-John Keenan

The recent launch of their iPhone app is a smart approach to taking advantage of new mobile technology, and inserting themselves – often the anonymous mall owner – between the consumer and the retailer, and positioning themselves to charge a toll for aggregating valuable information.

There are several analogies, and we can go back to a theory that was popular in the late 1990′s for a good one.  As suggested by Prof. Mohan Sawhney from Northwestern, among others, in many cases an “infomediary” that was aggregating information about an activity, could be more valuable than its related service providers themselves.  For example, TV Guide, for a time, had a higher value than the three broadcast networks combined.  Similarly, with this application, Simon is trying to become the go-to source for consumers planning a shopping trip, and by aggregating all the information about the various stores in each mall to help consumer pre-plan, they can deliver significant value.  If they can pull this off, they will be able to charge the equivalent of slotting fees to retailers, in addition to the revenue-based rent they already charge. Smart.

-John Keenan

Deal aggregators like FatWallet or Mr. Rebates, not to mention the airline loyalty program shopping malls, offer members discounts and in many cases cash back or loyalty point accumulation when buying through their sites.  There is commonly no cost to join most of these programs, which typically offer savings at mainstream e-commerce sites.

Now USA Today is trying a different approach, and I wonder how it will resonate with consumers.  Their recently launched “Insiders Club” requires consumers to pay a monthly fee to get access to discounts negotiated by Entertainment Publications.  These tend to be more localized and focused on different outlets than the deal aggregators – fast food deals, discounted admission to museums and local attractions, etc.

Current subscribers pay $3.95 per month, and non-subscribers pay $7.95.  Not clear if there are unique deals on offer, or deeper discounts than a typical Entertainment deal, but seems pretty pricey – you can buy an Entertainment book usually for less than $25, with the discounts offers valid over an entire year, and that also gives you access to deals directly through the Entertainment Publications site. And there are any number of loyalty programs powered by the same discount engine, which require only points redemption to get access to the discounts.

In a world where finding the best deal is only the click of a mouse away, and there is such a proliferation of free offers, hard to see how this or other pay-to-play discount concepts will get traction.  USA Today must have research projecting certain levels of adoption, but this seems like a hard sell to consumers.  I wonder when they will announce number of members?

-John Keenan

-Hallie Borden

So I tried a few… starting with Foursquare and Facebook Places.  Pretty easy to use – start the app, select your location and check in.  Generally, these experiences reinforced what I thought, and what many others before me have noted: trouble with the phone acquiring GPS indoors, tough to do with hands full, distracts you from your primary mission, etc.  And of course, they offered limited benefit to me – don’t really want to broadcast my location, acquiring badges and status just isn’t that important, and I don’t think I go to the same location often enough to be accorded a potential benefit.  I can see how they might be appealing to some people, although not sure they will ever achieve mass penetration among consumers, or mass acceptance by retailers.

Then I started playing around with a couple that say they offer more specific benefits for checking in or interacting.  Stickybits is an interesting idea, you scan a bar code from a product and see what others have posted about the same product, and for some products, you may receive a reward.  But it’s not that easy to understand – not sure of the point of posting a comment on every product I pick up, and benefits are generally unclear, although if I knew ahead of time which products offered rewards it might encourage me to use it more.  Also found the scanner application a little dodgy when trying to capture the barcode, especially if the light hits it in the wrong way.  I don’t think I’ll make it a habit, because it’s too much work for an unclear benefit.

Next up was TopGuest.  Their pitch is “Get real points, miles, and perks for places check-ins.”  They have already enrolled over 100,000 members who are primarily travel program points junkies.  Setup is multi-step: download the application, then link to a Facebook or Foursquare account.  Once you’ve done that, you get bonus points from partner programs each time you check in at one of their locations, for example, 50 Priority Club rewards when you check in at a Holiday Inn.  This is where it gets complicated – will the average consumer figure out if it is worth doing?  In this example, Priority Club already gives you 10 points for each $1 spent, so say 1,000 points per night at $100 spent – 50 additional points hardly seems worth it.  Especially if I’ve gone through all the trouble of linking up all of my accounts.  And it takes about 50,000 points to get a free night, so… 1,000 check-ins would do it.  Complicated.

Bottom line… lots of potential, and these are interesting attempts to tie location and rewards.  But I don’t think any of them have nailed it yet.  Now off to Sports Authority to go try ShopKick.  I earned a few points from them sitting in my office and reviewing deals, so this one seems easier.  And I like that it figures out that I’m in a store rather than me having to check in.  Now I’m waiting for them to sign a grocery partner – I think this one has a lot of potential to get and hold consumer attention, especially for CPG manufacturers… we’ll check back on this a little ways down the road.

-John Keenan

With the connectedness of today’s world, it seems as though cultures adapt to one standard: same technologies, same popular music, same fast food options. Globalization is often criticized for compromising local economics and culture through its attempt at convergence. Ironically, however, though universality is the ultimate goal for ‘going global’, the key to its success is actually found locally, as local trends and customs drive the ability for a brand to enter the global market.

The concept of adapting locally for a global product is not a new one, as local culture and traditions still dominate in attracting new markets despite mass culture. A recent article in AdAge discusses beer brewer SABMiller’s attempt to globally expand its brand and product, especially in light of Anheuser-Busch’s recent sponsorship of the World Cup. To continue to grow, SABMiller marketing executives were challenged to base their advertising upon the varying “attitudes, traditions and customs” of their desired market.

SABMiller’s attempt at “local intimacy” focuses primarily on finding a “quick cultural reference that will help people understand what the brand stands for”. For example, in Peru, certain bottles feature replica stones of the Incan wall, which denotes to the drinker the connection between the prestige of the craftsmanship of the Inca, and that of Miller’s product. Similarly, in Ecuador, local brewers offer limited-edition packaging and prizes around festivals to celebrate their nation’s tradition. Ultimately, SABMiller is not changing its brand or what it stands for, but rather finding individualized ways of relating it to new potential customers.

One of the best examples of product globalization is McDonald’s. A key to McDonald’s past success has been its ability to conform to local cultures. McDonald’s in Egypt offers McFalafel, beer and wine can be found throughout McDonald’s in Europe, and beef is not served in any McDonald’s in India, despite their predominant image as a hamburger joint. Similar to SABMiller, McDonald’s is indicating to its customers how their desire for fast, friendly and efficient service can fit into their lives without compromising their local individuality.

When expanding into a global market, it is difficult to appeal to a wide range of customers while avoiding criticism for compromising local culture. Ultimately, in order to be successful, a brand needs to imply to their consumer that their product is relatable, and that it can adapt to their lifestyle. If a brand is able to successfully globalize at the local level without compromising their own identity, it will potentially better show the universality of the product, rather than trying to find one global message. It will be interesting to see how future businesses try to adapt to local marketing, and how successful it will prove to be.