Spectacles, testicles, mobile wallet, watch

In this helping of Michael Carney’s Marketing Week:

  • The sudden importance of mobile wallets
  • What’s a Facebook Fan really worth?
  • Google’s answer to publishers’ love affair with the iPad
  • 10 ways to improve loyalty programmes
  • Digital Funding from NZ On Air
  • Outrageous Fortune, American-style

Are You Ready for Mobile Wallets?

Nokia has now become the first cellphone manufacturer to agree to include NFC [Near Field Communication] chips in many of its phones as of next year. This news matters, so don’t be overwhelmed by the technobabble, hang on for the ride.

First, a quick explanation of NFC. Take it away, Wikipedia:

NFC is a short-range high frequency wireless communication technology which enables the exchange of data between devices over about a 10 centimeter distance — turning mobile phones into mobile wallets.

There are three main use cases for NFC:

  1. Card emulation: the NFC device behaves like an existing contactless card (eg the Snapper card used on Wellington buses)
  2. Reader mode: the NFC device is active and can read a passive RFID tag, for example for interactive advertising
  3. P2P mode: two NFC devices are communicating together and exchanging information

Plenty of applications are possible, such as:

  • Mobile ticketing in public transport — an extension of the existing contactless infrastructure.
  • Mobile payment — the device acts as a debit/ credit payment card.
  • Smart poster — the mobile phone is used to read RFID tags on outdoor billboards in order to get info on the move.
  • Bluetooth pairing — pairing of Bluetooth 2.1 devices with NFC support will be as easy as bringing them close together and accepting the pairing. The process of activating Bluetooth on both sides, searching, waiting, pairing and authorization will be replaced by a simple “touch” of the mobile phones.

Other applications in the future could include:

  • Electronic ticketing — airline tickets, concert/event tickets, and others
  • Electronic money
  • Travel cards
  • Identity documents
  • Mobile commerce
  • Electronic keys — car keys, house/office keys, hotel room keys, etc.
  • NFC can be used to configure and initiate other wireless network connections such as Bluetooth, Wi-Fi or Ultra-wideband

Marketing implications include:

  • Easy, realtime upgrades to premium services
  • Instant updates on loyalty point totals
  • Private messages regarding the status of one’s account when trying to use the mobile as a payment device, rather than the unpleasant “Transaction Denied” (with no explanation)
  • A rich user experience that can be branded

The NFC technology standard has been around since late 2003. What’s been holding it back from widespread adoption, we’re told, has been the shortage of any phone manufacturers shipping units with any of these capabilities built-in. Currently, if you want to have NFC capability on your phone you have to add it.

Now Nokia’s pushed the Go button, and many of its 2011 mobile phones will carry NFC as standard. Apple probably won’t be far behind — the company has been filing patents for different NFC uses, including using an NFC-enabled phone to interact with an ATM.

British analysts SJB Research did a study of the implications of NFC and came up with these observations (as reported by Mobile Commerce Daily):

Businesses ranging from retail and travel to fast food, consumer goods, tourism and entertainment are all expected to be affected by the arrival of NFC services.

Government and educational service providers will also be impacted by its arrival.

Consumers with NFC-enabled phones will be able to simply touch their phone to a smart poster or product label containing an RFID chip to sign up for a loyalty program, collect a money-off mobile coupon, download a trailer for a new movie, access the latest travel information or go straight to a product’s Web site to read customer ratings and reviews and compare prices.

Social networks will also get a major boost, according to the SJB report.

With an NFC phone, consumers can friend someone online when they meet them in the real world by simply touching their phones together.

Or they can touch their phone to a smart poster as they go into a restaurant to automatically update their Facebook status and get an offer coupon from the venue as a thank-you for telling their friends that they are there.

Commuters will be able to store their travel pass on their phone and mobile versions of airline boarding cards, hotel room keys and even passports will make it quicker and easier to get from place to place.

Paying bills will become much simpler, too. Simply touch two NFC phones together to transfer money to a friend, buy a drink or pay for a service.

What if you lose your phone? It had to be asked. But NFC is a highly secure technology, according to SJB Research. Consumers will be able to instantly lock all the mobile wallet services on their phone if it is lost or stolen and then get them automatically transferred onto a new phone as soon as it arrives. They will also be able to use their phone to make payments even when the battery is flat.

Ultimately, only two or three companies in each country will succeed in building a major new business providing NFC services to businesses and consumers, according to SJB.

The winners could be banks or carriers, or even a new entrant to the market.

What’s A Fan Worth?

Whether you’re Justin Bieber or Just You, it’s nice to have fans. But for those of us of an analytical bent, “nice” isn’t enough, especially if we’re going to spend time and effort trying to attract fans and followers. We’d like a bit of ROI with that schmaltzy feeling, thanks.

As it happens, US consultancy Syncapse has done some crunching of the numerical variety, attempting to establish the value of fandom. They recently conducted a survey of 4,000 members of Facebook in an effort to understand the “long-term business value” that companies can derive from the social network. The metrics on which they based their findings were:

1. Product Spending: The relationship between “liking” a product and spending more money on it.

2. Loyalty: The value of influence and promoting brand loyalty within a target audience.

3. Propensity to Recommend: Probability and propensity for word-of-mouth recommendations leading to sales.

4. Brand Affinity: The impact on brand perception and recall.

Brands used in this study were twenty of the top brands on Facebook at the time of conducting the research. In order to ensure that the survey questions were applicable to each product type, research was focused only on consumer brands. Celebrity and un-official pages where not analyzed. Findings were then analysed contrasting fans and non-fans for these top brands: Nokia, BlackBerry, Motorola, Secret, Gillette, Axe, Dove, Victoria’s Secret, Adidas, Nike, Coca-Cola, Oreo, Skittles, Nutella, Red Bull, Pringles, Playstation, Xbox, Starbucks, and McDonald’s.

Here’s what Syncapse found:

  • Product Spending: On average, fans spend an additional US$71.84 on products for which they are fans compared to those who are not fans.
  • Loyalty: Fans are 28% more likely than non-fans to continue using the brand.
  • Propensity to Recommend: Fans are 41% more likely than non-fans to recommend a fanned product to their friends.
  • Brand Affinity: 81% of fans said they feel connection/empathy with the brand, compared to 39% of non-fans.

Across the twenty brands that were evaluated in this study, the average value of a Facebook fan was US$136.38 factoring in all areas measured within the Syncapse model. Not all fans are created equal. Some are extremely active with a brand while others sign up and never participate again. This results in the monetary value of fans varying dramatically.

The most valuable fan in the survey was that of McDonald’s who presented an annual value to the organisation of US$508.16. This would be a frequent visitor to their establishments, highly loyal, frequently referring, and participating actively in their Facebook community. An average McDonald’s fan netted the organization a value of US$259.82.

For a copy of the executive summary (which shows the performances of each of the twenty brands against the four metrics), send us an email.

Google Newspass

The latest news on Google has come from an unlikely source: a report from Italian daily La Repubblica announced that the internet giant is planning to launch a paid content paywall format, “Newspass”, by the end of the year. According to the Italian newspaper, Google has approached publishers to “test their willingness to participate in a trial” for a system that would allow micro payments as well as longer-term subscriptions to paid content.

Under this new system, search results on Google would include links to content protected behind paywalls (as well as the usual free stuff, of course). If you choose to click on a link to paid content, you’ll be asked to pay to access the content via your Google account — probably in a single click, once you’ve got yourself all set up, to make the whole transaction as easy as, well, an iTunes purchase.

When did Google start to drink the Murdoch Kool-Aid, and aspire to the notion of a paid internet? Reportedly, the company has been talking about such services to publishers over the last year or so — but their plans are now looking much more concrete. We’re sure that the arrival of the iPad and its hailing by publishers as a potential print industry saviour was purely coincidental timing. Yeah, right.

Once Upon A Time In The Wests

American networks don’t have a very good track record when it comes to adapting TV series from other countries into material deemed appropriate for US tastes. Creative decisions are made that, well, challenge the imagination.

So it should come as no surprise that SCOUNDRELS (the US version of OUTRAGEOUS FORTUNE) has attracted some pretty mixed reviews over there, from critics and consumers alike. Here’s one of the more moderate conclusions on the series, from the Hollywood Reporter:

At first, it’s hard not to like “Scoundrels,” based on a New Zealand series. It has Virginia Madsen as Mom-in-charge, and she brings a warmth and soulfulness to a role that could have been lost amid the shuffle of many quirkily obvious “characters.” Plus, it comes from the creative minds of two “Nip/Tuck” alumni, and if Ryan Murphy’s “Glee” is any indication, that portends well. Finally, the first episode’s frenetic rush of activity and intersecting story lines can make “Scoundrels” seem like a crackerjack new series.

Alas, there’s an essential elusive element missing that prevents it from really hitting the mark. It’s got a stuffy sense of pretension about it, as the story takes self-conscious stabs at being clever and hip and, well, like a cable series. Instead, those stabs translate into undaring and cheap theatrics that often go sour, particularly in dealing with the elderly. Alzheimer’s played for laughs? An Asian grandmother who kung-fus attackers into submission? Ugh. It’s as if there’s a black hole where the funny should be.

By the end of the episode, none of it even makes any sense — who wants to return to a series week after week in which all the dark colorful leads are striving to be as normal and boring as possible?

There’s nothing really wrong with “Scoundrels,” but it’s just hard to see what’s special about it, either.

On the other hand, consumer “nancysjay”, commenting on the Hollywood Reporter review, gave her own decisive bob’s worth:

This has got to be the worst thing ever to appear on TV. My husband and I are hugh David James Elliott fans; We own his 10 seasons of “Jag”; so now why did Elliott lower his standards to be in this dreadful series. He’s done his reputation of being a fine actor much damage. When he should have been in a sophiticated comedy he agreed to be in this trash. It was so bad we quit after watching it after the first 15 minutes…it must be the money (which will never buy back his reputation.

OnFilm reports that the premiere was watched by 5.1 million Americans aged 18-49, which equated to a 1.3 rating and 4 channel share — not quite the performance we’re used to from our Western allies, and low enough to put Scoundrels on the endangered species list. On the other hand, with one episode already broadcast at least Scoundrels has lasted longer than the legendary “Australia’s Naughtiest Home Videos”.

That show had the airing of its first episode (September 4, 1992) on Australia’s Nine Network cut mercifully short when Nine’s owner Kerry Packer, informed of the show’s content by friends whilst at a dinner, tuned in to watch the show.  He was so offended by its content that he phoned the studio operators and demanded it be taken off the air. After a commercial break, the network cut to a rerun of Cheers citing technical difficulties.

Digital Funding

Earlier this week NZ On Air released its list of those online projects it’ll be supporting through its million-dollar Digital Content Partnership Fund. Three made the cut out of 49 applications in this third year of the contestable Fund.

The three are:

  • Everyone Lies
  • Snort
  • Mixtape

“Everyone Lies” is the sequel to the interactive drama Reservoir Hill which won New Zealand’s first International Digital Emmy Award earlier this year. A sequel was probably inevitable, given the success of the original series. “Snort” is an interactive comedy portal supported by TV3. Aiming to be the online home of New Zealand comedy, the site will feature 32 weeks of original local comedy featuring both new and familiar comic talent.

The third investment is “Mixtape”, a music site which will allow music lovers to create personal, legal mixtapes of songs. Users will also be able to stream and share content online.

Ten Ways To Improve Loyalty Programmes

As noted by TheWiseMarketer.com: the Cornell Center for Hospitality Research has just issued a report highlighting ten principles that make it more likely that loyalty programmes will actually develop loyal customers. The report is specifically tailored to the hospitality industry but the principles involved are relevant to almost any business planning or already operating a loyalty scheme.

According to the report, entitled ‘Building Customer Loyalty: Ten Guiding Principles for Designing an Effective Customer Reward programme’, stronger loyalty programmes can be developed by paying attention to customer psychology and desires.

The research shows that the ten most successful methods of improving loyalty programmes are to:

1. Foster Customer Engagement: Loyalty is more than repeat purchases, and programmes must evolve to foster a deeper emotional connection between the customer and firms. That’s easier to say than to do, of course: this type of connection only comes from repeated positive interactions and experiences with a brand.

The researchers suggest that programmes that are designed to reward a broad set of “loyal behaviours” like engagement activities should see stronger involvement in the programme and an increase in both attitudinal and behavioural loyalty among its members. For example, at the basic level, customers could be provided rewards for simply updating and confirming their contact information as part of annual programme maintenance.

A simple effort like this one ensures accurate data and creates a reason for customers to visit programme websites, receiving a direct membership benefit for doing so and thus reinforcing their positive relationship with the brand.

2. Establish a Win-Win Value Proposition: Design your programme so that it offers rewards that provide high value to the customer yet carry low internal costs. For example, in place of a monetary discount on an existing or future hotel stay (low customer value, high cost), the hotel might instead offer that customer free use of a service for which the hotel usually charges (e.g., fitness facilities, wifi). This can provide high customer value at relatively low cost.

The challenge with this principle lies in implementation, because it requires knowledge of customers’ preferences. Not all customers will place equal value on all activities.

3. Capitalise on Customer Data: Think of loyalty programmes as irreplaceable market research: marketers can capture data on their consumers that can be used to better meet those customers’ needs. Loyalty and research initiatives should be integrated to use customer insights not just for marketers’ loyalty programmes, but for the broader business operations as well.

4. Properly Segment Across and Within Tiers: The tier structure of loyalty programmes must work for your customers. Most reward programme tiers are copied from those of long-standing programmes, and often represent out-of-date or inappropriate segmentation strategies. For instance, one well-known hotel chain offers their first reward tier after customers stay a minimum of 10 nights. While this reward is relatively easy to earn, the next upgrade occurs when the traveller reaches 50 nights in 12 months.

Do these tiers sufficiently differentiate the chain’s customers according to their potential value to the organisation? Chances are that the customer who stays 10 nights or less is fairly similar to the customer who stays around 11 nights. However, those who stay up to 49 nights are likely to have distinctively different needs and desires, yet are earning the same rewards as much less committed customers.

In addition, the gulf from one reward status to the next is so great that when a customer achieves the first status level she will likely conclude that the next level (40 additional nights) is not attainable. That customer is likely to shift her spending to the competition for the balance of the reward period in an effort to manage her “portfolio of rewards” for her lodging patronage. Thus, this tier structure provides an unintentional incentive for customers to shift to another hotel brand so that the customer can then earn rewards from multiple brands.

Businesses should consider the opportunities for segmenting programmes based on factors other than spending. For example, US pharmacy chain CVS recently launched a spin-off from its standard ExtraCare programme exclusively for diabetes patients. By making subtle changes to the rewards that are offered and to its supplemental services, the pharmacy may have discovered a simple way to differentiate its programme among diabetes patients by simply recognizing their needs and offering rewards that better align with those needs.

5. Develop Strategic Partnerships: Loyalty programme partnerships involve one firm providing their customers with the option of exchanging their rewards for offerings from firms in other industries. Administration of such arrangements are typically outsourced to a third party or are structured as one-way agreements, where one provider simply compensates other providers for their inclusion in the rewards offerings.

The partnerships should strike a balance between offering a broad set of rewards and overwhelming customers with too many options.

6. Develop Surprise Rewards: As noted under Principle No 4 above, once customers achieve a tier reward, if they conclude that they will not be reasonably able to reach the next hurdle, they can shift their business to the competition to solidify their rewards from that competitor’s loyalty programme.

One effective alternative strategy to offer relatively small rewards (possibly undocumented and apparently random) between the major tier milestones to encourage continued customer loyalty and deter switching. These strategies are based on the basic tenets of reinforcement schedules, where providing a mix of continuous rewards in conjunction with each transaction in combination with seemingly spontaneous, higher value rewards may have the biggest impact on behaviour.

7. Cater to Customers’ Desires for Choice and Fairness: Customers love choice and control, so effective loyalty programmes provide customers with flexibility in their redemption intervals and choices. Such flexibility may build engagement from customers when they feel that they have control over the benefits they receive in the program.

A simple example of this strategy is US electronics retailer Best Buy’s Premier Silver program. Among other features, programme members can choose when they receive rewards as well as the medium by which the rewards are delivered (i.e., via the programme website, via email, or via snail mail), rather than simply mailing rewards at pre-established set intervals.

Best Buy also offers customers the opportunity to “bank” their rewards, which provides customers control over their programme benefits and may even assist customers in setting upgraded purchase goals.

Customers also crave a feeling of fairness in their exchanges. Put simply, customers want to feel that they have earned their rewards, in part because achieving a reward tier is a matter of some distinction. When rewards appear “too easy” to earn, the prestige associated with programme and tier membership diminish, along with the allure of the programme itself. As a result, managers must carefully develop a rewards mix that aligns with the effort required to earn them.

8. Avoid Commoditisation by Differentiating: Programme differentiation may be the single biggest challenge currently facing loyalty programme managers. There are only so many ways to differentiate a programme when all the details of programme structure and tiers are completely transparent.

Some successful programmes are differentiated by experiences or service benefits that complement the standard “monetary” rewards. These supplements could be as simple as prioritized service, exclusive events, direct access to and consultation with employees, and flexible programme management. Supplementing a programme with value-added offerings not only helps with differenting the program, but it also encourages more interaction between the customer and firm, creating an opportunity to foster deeper feelings of loyalty.

9. Avoid the ‘Price Sensitivity Trap’

Another reason to differentiate your programme with non-monetary rewards is that it’s important not to focus your programme too heavily on price concessions. Many reward programmes are still based on a simple design that provides customers with future discounts as a reward for current spending. While these programmes have demonstrated some value to firms, they carry a substantial risk of converting traditionally loyal customers to price sensitive ones.

10. Embrace New Technologies: Loyalty programmes should take advantage of technology advances. The days of the punch card or even plastic loyalty cards are quickly vanishing. Products like FourSquare and other PDA-enabled programmes offer the potential to reward customers in real time. Having the ability to know what your customers are doing at any time can allow managers to anticipate customer needs and preferences thereby increasing customer satisfaction and differentiating their product from that of their competitors.

Social Media eCourse

For full details of the seven week social media programme click here.

About Author

Comments are closed.