3 Musts for Retailers This Back to School Season

Back-to-SchoolBack to school season is upon us and retailers are getting ready for what is expected to be a stronger consumer spending year. As you prepare for the season, carefully think about how to best use your loyalty program to keep your customers choosing your brand while shopping.  Consider these 3 ways to reach your goals this season:

  1. Use customer data for personalization

    Give your loyalty members a reason to feel special and offer them unique advantages for being a part of your program, instead of having the same offers across the board for all existing and new customers. They are already seeing offers from various retailers, so your program should make them feel like they are valued members who are receiving additional exclusive offers that are special to them. Leverage your repository of customer data—from what products your customers have looked at and saved/added to a wish list, to products they’ve purchased recently, and products purchased during last year’s back to school season—and analyze this data to segment your marketing. Know which products they may be interested in, when they are likely to repurchase, and which incentives are more likely to influence them. Equipped with this, you can create personalized member incentives and offers to convince them to continue shopping with your brand and not be tempted by your competitors.

  2. Incentivize during the consumer research period

    In store is back to school season’s top choice for purchase channel, but consumers are spending more time researching and comparing back to school products & promotions online than spending time in physical stores, meaning that more of them have an idea of what they are going to purchase by the time they enter the store. Shoppers are also shopping earlier and researching even earlier, about two weeks before they make their purchases, so it is important to reach your consumer while they are in this product research period—before they have made up their minds about where to shop and what to buy. This emphasizes the importance of having enhanced communications across channels going into the season. Make sure to have your presence and messaging ready to influence their research experience. From looking at your customers and market trends, strategize how to use your promotions and rewards to incentivize the specific behaviors you want. Want to drive more traffic to a specific channel? Reward members with extra points, elevated service, or discounts for shopping through that channel. Want to drive purchase towards a specific product or category? Offer first access and exclusive sampling to encourage product trial amongst customers.

  3. Stand apart from the overflow of back to school deals

    Back to school is one of the busiest shopping times of the year with numerous retailers competing for consumers’ attention. Most importantly, with all of the promotions going on during this time, yours need to stand out from the crowd and have heightened messaging while not being interpreted as spam. You want consumers to stay with your brand and not be tempted by the plethora of back to school deals. You already have a leg up from many other retailers by having these members as part of your loyalty program, now you need to use this to your advantage. Show your members that you know them and express the value they receive from being a part of the program. Through the use of your loyalty program, you can create campaigns that are more personal and engaging, and make them stand out by not having to only rely on offering dollars off. What is your company’s/program’s unique value prop? Your members are interested in your brand and are more likely to be persuaded by non-monetary rewards and benefits. Through additional knowledge of their preferred communication channel, you should direct your marketing to accommodate their preferences.

Always remember to measure the results of what is working and not working to make tweaks and plan for future high-volume shopping seasons. Reach out to 500friends with any questions or if you are interested in learning more about how loyalty can benefit your business!

[Webinar Series] Leverage 1st Party Loyalty Data for Smarter Acquisition


Our final webinar of our “Going Beyond Just Points: How your Loyalty Program Can Drive Actionable Insights” series will be Thursday, June 11 at 10:00 PDT / 1:00 EDT. Register now for “Leverage 1st Party Loyalty Data for Smarter Acquisition” to learn from Matthew Gilbert, SVP Loyalty Services, and Nicholas Illobre, Director of Performance Media, at Merkle about loyalty data’s influence on customer acquisition and programmatic buying. 

Programmatic buying without leveraging loyalty-related 1st party data misses an opportunity in acquiring higher lifetime value customers. Loyalty programs can provide a more in-depth understanding of your customers with data sourced from loyalty profiles, social accounts, and content creation. The resulting central repository of 1st party demographic, preference, and behavioral data allows for enhanced segmentation and lookalike models that result in smarter customer acquisition.

Register today and be sure to contact our events team with any other questions you may have!


MattGilbertMatthew Gilbert

SVP Loyalty Services
500friends, a Merkle Company




Nicholas Illobre

Director, Performance Media

[Webinar Series] Differentiate and Personalize Your Loyalty Program to Drive Engagement


We are excited to keep the momentum going with our latest webinar series “Going Beyond Just Points: How your Loyalty Program Can Drive Actionable Insights”  where we will discuss how to leverage loyalty data in customer identification, engagement, and acquisition.

The 2nd webinar in this 3-part series, “Differentiate And Personalize Your Loyalty Program To Drive Engagement”, will be presented by Justin Yoshimura, Co-Founder/CEO, 500friends, a Merkle Company and Samanth Ngo, Researcher, Customer Insights, Forrester Research on Thursday May 28 at 10:00 PDT / 1:00 EDT.

Many customers are treated as if they’re one and the same although there is so much customer information available to us. This approach of not engaging with customers on a more personal level can be detrimental to your customer relationships, which are vital to your success and competitive differentiation. Learn how the information provided from a loyalty program can help ensure that messaging increases in relevance, maintains margin, and builds a more personal and meaningful relationship with each member.

Register today and be sure to contact our events team with any other questions you may have!


JustinYoshimuraJustin Yoshimura

Justin is responsible for the vision and strategic direction of 500friends. His infatuation with retail began at age 14, when he opened an eBay account and quickly became one of Ebay’s top PowerSellers. Since then, Justin has founded two profitable ecommerce companies with $10M in revenues, and has been recognized by Forbes as a “30 under 30″ entrepreneur. He is also an investor in disruptive ecommerce and SaaS companies including BoostCTR, Bounce Exchange, Firebase, First Opinion, Hipmunk, Homejoy, ifeelgoods, OwnLocal, and Zencoder.

Samantha-Ngo-PR_1Samantha Ngo

Sam is a researcher at Forrester Research serving Customer Insights Professionals. Her research spans how customer and marketing data drives business decisions with a focus on best practices, trends, and tools in the areas of customer loyalty and digital intelligence. As a research associate on the Customer Insights team, Sam supported several analysts with research on customer loyalty, marketing technology, digital intelligence, social listening, and customer analytics. She also supported a number of Forrester Wave™ evaluations and is familiar with the methodology. Sam holds a B.A. in Business and Psychology from Franklin & Marshall College.

[Webinar Series] Increase Matchback Rates Through Customer Identification


We are excited to present our latest webinar series “Going Beyond Just Points: How your Loyalty Program Can Drive Actionable Insights” where we will explore how to leverage loyalty data in customer identification, engagement, and acquisition.

The 1st webinar in this 3-part series, “Increase Matchback Rates Through Customer Identification“, will be presented by Arif Damji, Senior Director of Strategy and Development, 500friends, a Merkle Company on Thursday May 21 at 10:00 PDT / 1:00 EDT.

Large numbers of customer identities are currently unknown and brands struggle with linking together customer purchases, LTVs, and preference trends. Without the knowledge and understanding of who your customers are, you are missing out on a huge opportunity to drive customer satisfaction, enhance relevancy of messaging and offers, and increase order frequency and value.

Loyalty data is the tool that transforms the unknown consumer into an identified, addressable customer.

Learn how driving self-identification of customers across all channels with your loyalty program increases match-back rates and your understanding of customer spend and behavior. This in turn allows you to enhance the effectiveness of your messaging and drive customer lifetime value.

Register today and be sure to contact our events team with any other questions you may have!

About the presenter:

ArifArif serves as the Senior Director of Strategy & Development for 500friends, a Merkle Company. Through his role he helps to formulate the vision and strategy for numerous successful loyalty programs, while also driving many of 500friends’ strategic partnerships. Prior to 500friends, Arif was a strategy consultant at McKinsey & Company serving multiple industries including Travel, Financial Services & Marketing Services. Before joining McKinsey & Co he worked with a number of financial services firms including Barclays Capital, Spinnaker Capital, and the National Bank of Abu Dhabi. Arif holds a M.A. in Economics from the University of Cambridge and a M.S. in Management Science from Stanford University.


Many Loyalty Programs Aren’t Realizing Their Potential

merkle-500friendsOriginally posted on Merkle’s Retail blog:

While there are now more than 3.3 billion loyalty program memberships in the U.S., only half of enrolled consumers are active. Why is that?

Since the purpose of a loyalty program is to influence consumer behavior, companies need to plan and execute their programs very strategically and wisely to achieve the goals they want. Among the growing selective member base, this is where many leading organizations may fall behind. Make sure to think about providing a “fair exchange of value” – I’ll give you my personal contact information if you deliver additional value – as the consumer strategy upon which all loyalty programs are developed. Creating an ecosystem of engaging content, enticing brand experiences, and preferential valuable services that go beyond the core product or service is where loyalty programs can have a huge impact. Points are a tactic, apps an operational enabler. It’s time to take a step back and think strategically about your consumers’ loyalty before your competitors do!


Many retailers have loyalty programs in place, but without effective planning, more and more may end up struggling to prove their ROI – driving sales or retaining healthy margins. While the underlying goal of many loyalty programs may be to keep customers away from competitors, Merkle’s recent consumer survey found that less than one-fifth of consumers cite today’s loyalty programs as a main differentiator between competitors.

On the flip side of the coin, when done correctly – strategically guided and well executed – retail loyalty programs can have a huge pay-off. In one example, a major retailer’s loyalty program was successful in increasing average spend by 20% per member, program enrollment by 45%, and repurchase rate by 14%. Retailers who master a personalized, omni-channel approach to loyalty increase their revenue upwards of 10X.

Deep Dive Example

One major luxury footwear company used their retail outlet to actively solicit consumer’s contact information, rewarding associates based on how many consumers they individually acquired. When queried about how they used this information, they proudly reported that they sent them a promotional email every week. Customers who visited branded retail locations are likely high-value customers. Bombarding them with promotional messages not only erodes the brand’s luxury positioning, but could be perceived as annoying spam and worse yet erode margins of full-price customers.

What was the missed opportunity?

  • Engaging Content – High-quality leather shoes need TLC if they’re to last. My grandfather used shoe trees to keep his shoes stretched out – should we all be using them too? How do we get these annoying winter salt stains off our uber expensive shoes?
  • Analytic Insights – Transactional data could be used to upsell and cross sell. If you love your black loafers/boots, then how about a pair in another color? Geolocation could help you highlight the retail locations that carry your brand which are closest to that consumer’s home address.

Loyalty Program Best Practices

1. Start With Specific Behavioral Objectives – Think about “shift, lift, or mix.” Do you want to shift the relationship to a broader base and transform top customers into devotees and advocates? Or is your goal to lift customers into higher LTV tiers? Expanding your mix of products and services across your portfolio can improve margins, decreasing operational costs associated with seasonal demand spikes, increasing average order value, and more.

2. Use Analytic Insights to Inform Loyalty Marketing – We have data at our fingertips and it needs to become an integral part of your loyalty program. You want to ask your customers what they want in their program and what perks or rewards are most compelling for them. Then use these insights to segment loyalty program members and begin personalizing their treatment.

For example, don’t keep sending lapsed users more coupons. With an integrated view of the customer, use the data to understand:

  • Department – Personal-shopping request may indicate either “fashion challenged” or like “high touch”
  • Spent $X – LTV Tier ‘Most Growable’
  • Customer Service – Complained to the store manager about the atrocious service levels.

So what reactivation or win-back message would be the “Next Best Offer”?

3. Operational Entanglement – Starbucks and Dunkin’ Donuts have done this right. Apps that enable people to pay and order from their smartphones make these coffee chains easier to do business with. When I tweet my order to my neighborhood barista, my coffee is ready and waiting for me when I arrive.

4. Add Value – Preferred access, like airlines use, is a great example of added value. We all like to board a plane first because there is actually room for our carry-on luggage. The three magazines I still subscribe to have increased my readership because they’re available anytime and anywhere I have a moment to read – improving their stickiness by providing omni-channel content. Think about your consumer’s journey. Identify opportunities and touchpoints where you’re able provide additional value – first to loyalty program members and then, perhaps, beyond.

Loyalty done right is fertile ground for changing consumer behavior by engaging and immersing your customers in an enriching brand experience. This creates true competitive advantage and measurable results, not to mention happy, loyal customers!

Keeping Up With Today’s Loyalty Demands


Originally posted on IBM’s Smarter Commerce blog:

Loyalty marketing is more and more prominent in today’s retail landscape. It is becoming common knowledge that customer acquisition costs are increasingly rising, and data-driven customer retention is a key area filled with untapped growth potential. But loyalty marketing is evolving and is more intricate than just offering discounts to existing customers. As many marketers realize, there are three common problems that they run into when trying to implement an effective loyalty program:

  1. They often feel stuck offering dollars-off discounts and are losing their margins without sustainably changing their customer behavior.
  2. Personalization is not going further than using much more than a first and last name, and is not connecting to the customer and building customer relationships.
  3. Their loyalty members are not actively participating and being engaged, and consequently not influencing long term results.

Today, there is an average of 29 loyalty programs per U.S. household, but people are only active in about 12, or 41%, of them. Customers are selective about their loyalty programs, which underlines the need to make yours stand out and be as efficient as possible. This requires close attention to 1) increasing customer self-identification, 2) taking personalized communications, opportunities, and rewards to the next level, and 3) extending the program to be omni-channel and connect cohesively across all customer touch points. In executing on those requirements, the loyalty payoff can be huge. One major retailer’s loyalty program was successful in increasing average spend by 20% per member, program enrollment by 45%, and repurchase rate by 14%.

Increasing Self-Identification

Loyalty incentivizes customers to provide more information about themselves and engage across channels, which leads to a richer understanding of your customers and how they interact with your brand. You may be surprised how many of them are open to providing information about themselves in order to receive more relevant communications and offers. Collecting information that they provide through forms, surveys, and feedback can be very useful, as well as connecting customer social accounts. With social accounts, in addition to seeing basic information such as their age, gender, and location, you can also see their likes, actions, and which topics they are posting about. Expanding your repository of customer data is critical to developing a holistic customer view to ensure you are implementing the most effective strategies for your unique customer base.

Taking Personalization to the Next Level

In addition to increasing customer self-identification, you should track and analyze metrics such as order frequency, average order value, and from which channels customers are purchasing. Modern loyalty programs gather this customer data and provide a centralized hub which is used to personalize meaningful incentives and rewards for higher customer redemption and satisfaction, and also to send personalized messages. These messages can be targeted towards specific actions and customer segments, and are used to maintain relevance and build upon customer-brand relationships by making customers feel like you are paying attention to what they want. For example, using loyalty program information, instead of running a general email promotion to all existing customers, you can specifically run it to gold tier members that ordinarily make a purchase every two months, but are now coming close to not making a purchase in two months. By knowing the purchasing habits of this narrow segment, you are able to selectively and more effectively run this promotion. Using personalization, you also do not need to depend on blindly providing dollars-off to all customers without sustaining engagement in the long-term, when you have the insights to segment customers, deliver personalized experiences, and understand how to truly interest and engage your customers.

Keep track of what your customers like and dislike, inside and outside of your company. If it means being presented with relevant offers that match their interests, 64% of people would choose to have their individual activity tracked.

Cohesive Omni-Channel Capabilities

With today’s consumer having the ability to interact with your brand across all channels, it is essential to have cohesive communication, connectivity of data, and customer access to your program and rewards at all touch points. Different consumers like to interact with brands through different channels – whether in-store, social media, or email – and your program should be available in their preferred channel. It is also a quick way to lose an engaged customer from your program if they do not have the access they expect or if they are receiving different information in different channels. Having robust and consistent communication across all touch points is key to providing brand validity, trust, and ease for the customer to solidify their loyalty.

Today’s consumer is accustomed to numerous messages competing for their attention across different channels. It is imperative to stay on top of the evolving loyalty landscape and customers’ expectations and preferences to make the most of your loyalty program.500friends, A Merkle Company, helps retailers build more profitable customer relationships with omni-channel loyalty programs and strategies. We partnered with IBM WebSphere® Commerce for our software-as-a-service (SaaS) loyalty suite, LoyaltyPlus, to easily develop a richer hub of data for better customer understanding with faster time to value for our mutual clients. LoyaltyPlus connects customer data at all touch points, from in-store to mobile, and delivers a seamless, fully branded omni-channel experience.

Moving Away From a Dollars-Off Program

iStockPhotoMany CMOs face the problem of trying to entice customers by providing discounts, and want to use a large enough funding rate to make a significant impact on their customers’ spending, but they also do not want to lose their margins.

Offering discounts is an important aspect of marketing and helps with customer acquisition, but often delivers diminishing returns and does not sustain customer engagement in the long term. What’s more is you’re losing money over providing discounts to customers who are making purchases that they would have made anyway. You’re left with losing money over not consistently changing customer behavior.

You do not need to rely solely on discounts and high funding rates to motivate customer spending. You can keep your margins and increase customer retention through a different approach, and this approach is engagement-based rewards.

Why non-monetary rewards work

Customers want special offers. The trick is that certain customers value certain benefits as much as monetary discounts, if not more. These benefits have high perceived value. For example, an engagement-based reward may only cost you $5, but have a perceived value of $20 to the customer. The point is to offer engagement-based rewards specific to what the customer values highly. They may want exclusive knowledge about exciting things going on within your company, an exclusive item, or access to a special event with recognition for being a loyal customer. Another example is to offer exclusive access to new merchandise, after the customer purchases a certain amount. Not only are you motivating customers to spend more, but they are rewarded with an experience that brings in more profit. Many options, such as providing exclusive early access, are virtually free. This means that you are fulfilling their wants, in a way that does not eat away at your margins.

Remember to focus on relevance

Make sure to collect data on what your customers are interested in to provide the most relevant rewards. Collecting information from private site exchanges, as well as information that they provide through surveys, feedback, and connected social accounts can be very useful. You want to know what they enjoy within and outside of your company and their interactions with your company at all touchpoints. Reward relevance is important to the customer, and 64% of people would actually choose to have their individual activity tracked if it means they will be presented with relevant offers. Relevant rewards have a higher redemption rate and the customers feel like you are listening to what they want.

Offering a variety of strategic rewards is a win-win situation for both you and your customer. You can lower your funding rates and simultaneously build upon your relationship with satisfied customers to increase their customer lifetime value.

To learn more about loyalty strategies and rewards, and how 500friends can help your company, contact mkbrown@merkleinc.com.

We’ve Moved!

As of today, our new office location is:

222 Sutter St., Suite 450
San Francisco, CA 94108

We’re excited to join offices with our Experience Design Group in Merkle! Our new office is also in a great location within walking distance to Union Square and numerous restaurants, hotels, and retail stores.


Importance of an Effective Trigger-Based Communication Strategy

communicationOnce you implement a loyalty program, you are not yet finished with your loyalty strategy. In fact, there is a good chance that a loyalty program is set to be ineffective if it does not have an ongoing and robust communication element in place. Successful loyalty programs initiate a behavior out of your customers that they would not otherwise have done, and whatever the initiatives may be, they need to be communicated properly and clearly to be effective and drive results.

This is apparent for many of our consulting engagements, that companies are not making the most out of their current programs because they are lacking simple communications–and many do not even realize they are doing it. They are letting members become inactive because they are assuming the customer has all of the information they need about the program. This may be due to the fact that it is easy for the customer to look up the information on the website or initial signup message. But the truth is that the average customer is unlikely to stay on top of this information in a way to consistently change their purchasing behavior. These customers need a little push in the right direction, and when doing so through trigger-based messages, there are two important aspects to keep in mind:


Customers dislike being bombarded with general messages that do not seem to apply to them. It is impersonal and makes them feel they are being spammed, which no one gives a second thought to. By sending personalized trigger-based messages to individuals in real time, you are recognizing them for their immediate actions or status. It is saying, “Congratulations on earning 75 points–you are now only 25 points away from reaching your next highest reward.” Or you can even say, “We see you looked at this product and think you may enjoy these similar ones…”

These messages do not only apply to when the customer needs to perform an action, but also recognizes them for their positive actions completed. Thank them for choosing your company, for purchasing that product, and for being a loyal customer and reaching that membership tier. They will feel more connected to the company and that they individually are valued.

Sense of urgency

In addition to personalizing your messages, trigger-based messages create a sense of urgency to perform a certain action as soon as possible. If you send a notification for an expiration date approaching, whether it be for points or membership tier, the customer is motivated to perform the action before that date comes. In an example of saying to a member, “You have been inactive for 156 days today, and we are letting you know that you have only 24 days days left until your gold-level membership tier expires,” remind them of what they are capable of receiving in that gold-level tier, and influence them to not want to lose that status in a few weeks. If you do not currently have deadlines, setting some (with effective communication) is a big win for increased incremental purchases and creating a sense of urgency.

Through effective communications, you will build upon your individual relationships with your customers while keeping your brand on the top of their minds. The customer will know exactly where they stand and what they need to do, and the resulting influence on customer behavior will have a huge financial impact.

For more information about how to make the most of your loyalty program, or how to start your own, contact mkbrown@merkleinc.com

When Should You Start Thinking About Loyalty?

How do you know when it’s time to start thinking about loyalty?  Investing in loyalty is a big decision but has great rewards if deployed correctly and efficiently.  Loyalty is a solution for companies who want to drive incremental lift and better understand their customers.  If you are contemplating whether or not loyalty is the right solution for your company, ask yourself these three questions:

1.  Is your cost of customer acquisition high (and your customer retention rate low)?  

Most retailers, if not all, will answer yes to this question.  With methods like search engine marketing and paid search advertising, the cost of acquiring a customer is skyrocketing and hurting profitability.  Today, brands must focus more on retention rather than acquisition.  In the long-run, shifting your efforts towards retention will be more profitable as you will encourage repurchase rather than a one-time purchase with acquisition.  So how do you keep customers coming back for more?  Loyalty programs effectively maximize customer lifetime value by providing highly personalized user experiences and relevant rewards.  In incentivizing a customer to return, you will continue to capitalize on your investment.

 2.  Are you giving away your margin?

Are you constantly relying on discount codes and coupons to incentivize customers to purchase?  If so, this may be the perfect time to start thinking about loyalty.  Loyalty trains your customer to repurchase, rather than to expect discounts.  Substituting discounts and coupons for loyalty promotions will prevent you from giving away your margin, especially to customers who may already be loyal.  An example of a loyalty promotion that preserves your margin is early access to products for members.  While this comes at no cost to you, its initial exclusivity makes your loyal customers feel special and gives them the opportunity to buy.  Offering double points, rather than straight discounts, is another example of a loyalty promotion that can save your margin.  Consumers will earn a percentage in point value per dollar spent, which will go towards future purchases.

 3.  Are you having trouble understanding your customer across channels?

Nowadays, customers have the ability to shop online, in-store, through mobile, etc.  However, the data is siloed and it is difficult to connect the dots between systems.  Omni-channel loyalty programs solve this problem by incentivizing customers to self-identify and engage across channels.  Loyalty is a hub for customer data as it gives customers a reason to say who they are and provides a richer understanding of how customers interact with a brand.  Providing a consistent, omni-channel experience for your customer is mutually beneficial.  Investing in loyalty will give you a complete view of your customers and allow for targeted campaigns.  And in turn, your customers will receive rewards and benefits that are truly geared towards them.

These questions can help you begin to think about loyalty.  Loyalty has an array of benefits, from providing a holistic view of your customer to encouraging repurchase through the data it collects.  A program that encompasses multiple channels has the ability to drive profitability and may just be the solution you need to elevate your brand.

Reach out to Matt Brown, our Senior Director of Sales, at matt.brown[at]500friends.com if you need help answering these questions or request a demo of our loyalty program platform, LoyaltyPlus, to see if we’re the right fit for you.