Tuesday, 7 December 2010

Social media and loyalty cards – the next big thing?

Loyalty cards: most of us have them these days. Supposedly we – the customers – derive great benefits from them because we can get “free stuff”. In reality, of course, the real beneficiaries are the producers because they can gather huge amounts of data about our spending patterns and adjust their marketing accordingly. Of course you could argue that this benefits the consumer too: it’s much better to get a money off voucher for a product you regularly consume than for something you’d never buy (I have a cat, so why do I need a dog food voucher?) Very clever.

From loyalty cards to online stores was not a very big leap. Online stores can not only track what you buy, but also what you look at (bricks and mortar stores can’t do this). So marketing can now bring in information about your browsing as well as your buying habits, and target you accordingly. If you shop online I’m sure you’ll notice this in the marketing emails you receive.

But so far retailers have been slow to take up social media apart from in a very general way. Most big retailers will have a Facebook page and YouTube videos – but this is basically generic marketing stuff, not much different from a traditional catalogue. It’s not focussed – how could it be?

Well, just stop and think. If I’m following you on twitter or I’m a Facebook friend, you can start to gather a whole new range of information about me in addition to product buying and browsing habits. For example, gathering information about my preferences in relation to other retailers and other product ranges. At present this information will be very diffuse and hard to analyse – though data mining tools can very effective nowadays, but just imagine if you hook this up with the loyalty card idea: you (the consumer) get some benefit as well.

Here are just a few ideas about how retailers might start to use this link (and by the way, if you are a retailer reading this and getting the ideas from me, perhaps you’ll give me some credit for it!)

  • Facebook games: this type of game allows players to gather reward credits that are added to their loyalty cards when they play. Embedded within the game are clever routines that get the player to reveal something about their buying habits, product desires, etc. That way the retailer gathers more focussed information and the consumer gets the loyalty card credits. Also, if the player recruits their friends into the game they can gain credits that way too.
  • Retweets: get followers of the retailer’s Twitter feed to retweet and earn loyalty card rewards. This one doesn’t really gather more information for the retailer, but it helps with viral marketing and is cheap.
  • Delicious bookmarks: works like retweets – earn rewards when you bookmark and positively review a retailer’s site; the greater the popularity of your bookmark the more rewards you earn. Again, like the retweets, this is cheap advertising for the retailer.
  • Search bars: this one is already happening, e.g. Nectar. Here you install the retailer’s “custom search” bar in your browser and earn rewards for all the searches you make. And of course in the background the retailer collects information about your searches. Which can then be used for marketing.

Like everything in the social media world, this could be a good or a bad thing. Like it or not, retailers already collect huge amounts of information about us (about the only way to prevent this is to not have any loyalty cards and always pay by cash). On balance it’s probably more good than bad for the consumer because they want to make money out of us, and they realise that the best way to do that is to keep us coming back for more. So if they abuse or annoy us, they risk turning us away, and they’ll try to avoid that. From a "Groundswell" point of view, this is the energising step.

However, like all things in a materialistic, capitalist marketplace, it’s buyer beware!

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