(This is the fourth Future Patrol, a monthly series of macrotrend posts by WONY StrategistEmily Segal. You’ll see Wolff Olins’ established macrotrends called out with a hashtag.)
#Hyperloyalty
I. What it is:
Loyal3, launching in May, is a new startup that enables consumers to buy shares of companies (really $10 fractions of shares) directly on Facebook, an idea CEO Barry Schneider is calling “the ultimate ‘like’ button.”
Loyalty programs have already become a focal point for incenting consumer behavior, creating personalized perks, and gathering consumer data.
Loyal3’s move to put real stakes behind consumer engagement shows that loyalty is beginning to generate new revenue models. The #Hyperloyalty trend is about precisely this kind of consumer-focused shift from marketing to value creation.
Future Patrol predicts that loyalty programs will become an expectation for every brand –even in industries that have conventionally gone without them – with elements such as crowdfunding, branded currencies and extra perks for good social media behavior as key features.
II. Some examples:
FROM REWARDS TO MICROECONOMY
The line between jokes and innovation has become increasingly blurry. Virgin Holidays’ April Fools’ Day hoax, a branded currency with Richard Branson’s face on it, recalls a trend we discussed in Future Patrol’s #Funny Money post: loyalty and rewards programs are becoming alternative currencies unto themselves, with points that can be redeemed for nearly as many things as cash can.
“Most large companies – from Starbucks to British Airways to Sheraton to American Express – are evolving their reward and point loyalty systems into digital micro-economies, complete with redemption and exchange between systems.” (Cayman Financial Review)
EXTREME CONSUMERS
Frequent flyers are the day traders of this new economy.
“Mileage runners are the high-tech nomadic wanderers of the air. Predominantly male, generally obsessed with flying and miles, and typically employed in white-collar careers that involve significant business travel, they scour the web for cheap flights, phoning in sick or using vacation days to fly the longest itineraries they can string together.”
GAMING THE SYSTEM
Loyalty programs – and games – are both about incenting customer behavior, and both use feedback loops and points to that end. But a loyalty system need not actually be a game to feel like one.
“Assembling a mileage run means deciphering complex fare rules and pulling together information from up to a dozen websites. It’s an achievement that tickles the same satisfying problem-solving centers of the brain as a Sudoku puzzle, and always ends in the deep-rooted human thrills of travel and flight.” (Wired)(“Frequent Flyer” documentary on Vimeo)
THE EMOTIONAL LANDSCAPE
Freedom is the best perk.
“Designing programs with an overarching theme of “freedom” can instill incredible power into our initiatives.” …. “Not “freebies.” But “freedom.” The ability to do things, to make decisions, to enhance one’s life, in ways that wouldn’t otherwise be possible. The word is telling. Many elements contribute to freedom, and, yes, the freebie is one such element. Others include privilege, convenience, assistance, guidance, choice and ease.” (“Freedom: Perhaps the ultimate aspirational reward” Colloquy Blog)
COERCIVE CURRENCIES
However, “freedom” is not the first word that comes to mind when integrating social media into loyalty schemes. Giving consumers deals or discounts because they have desirable social media influence is a marketing trend, but also can create a coercive situation in which consumers must forfeit deals if they want to preserve their privacy
+ Gilt Groupe provides extra discounts for users with high Klout scores
+ Amex / Twitter: The new Twitter integration lets American Express cardholder receive special offers by tweeting with a special hashtag. Initial partners include Zappos, the Cheesecake Factory, McDonald’s, Best Buy, Virgin America, and Whole Foods. In order to redeem a deal, you send a tweet with a hashtag and the offer is loaded on to the account. The credit appears automatically when the card is swiped. (Venturebeat)
+ Exchange systems like Pay with a Tweet, or Chime.in that exchange goods for social media “love” and personal data from consumers
+ Reputation currencies like Whuffie Bank (where you get discounts and rewards based on your online social reputation)
III. What this means for brand:
+ Extreme consumers and mileage runners have invented their own rituals around current loyalty infrastructures. There’s an opportunity for brands to leverage the subcultures that spring up around the way they architect their companies. What seems like extreme niche behavior today will likely be mainstream tomorrow.
+ Don’t become so seamless and ubiquitous that you slip beneath the convenience threshold. Failure and friction are important elements in building brand loyalty – and put the “social” in social media. Help your customers “play, fail, replay, achieve, succeed and progress” (LS:N).
+ Brands that make customers feel free are powerful, but the feeling of getting away with something may be even more powerful.
The world of personal finance is unnecessarily complex and overwhelming. In November, I wrote about Simple, an up-and-coming startup that hopes to turn the banking industry on its head. This week I wanted to highlight a few other startups that are simplifying and humanizing the way we perceive and interact with money.
Need to split up the restaurant bill? Need to write a check to your roommate for rent? Venmo makes transactions between friends fast, seamless and effortless. Add your bank account, and then start sending and receiving payments. Pay a friend back by simply replying with a text message or do it through the app.
My savings account has been collecting dust. For the past two years, I’ve gotten calls from my bank encouraging me to invest my money in a mutual fund.The jargon, opaque fees, over salesmanship has led to inertia. Until recently.
A couple of months ago, I stumbled upon Betterment, a new service that makes investing transparent, simple and painless. You don’t have to be a certified accountant to use Betterment; they translate the jargon and use normal, everyday language. You don’t need to have a lot of money to start investing; there are no minimum balances. Plus, you can make deposits and cash out whenever you want – without paying extra fees.
Don’t have time to track Twitter or Facebook for money-savvy content? Subscribe to DailyWorth, an email newsletter everyday that provides practical tips, real stories and inspiring ideas to help women take control over their finances.
Groupon, the daily deals provider, has generated so many customer complaints about how it markets its deals that it could face legal action unless it improves. Why? The portal maintains that rapid growth is at the heart of its problems - its internal processes and procedures had struggled to keep pace with its expansion. This is certainly not the first time a brand has become a victim of its own success. So, how can high growth businesses ensure that its functions keep pace with its growth? We put our heads together to come up with some advice:
Learn to say no: Just because you can doesn’t mean you should. This sometimes means denying the customer for a bit. Yeah. Heresy. The ‘customer’ is not an excuse for treating suppliers poorly, being underhand, or pursuing a business model that is actually inherently unsustainable.
Decide what you are going to suck at: Nobody is world class at everything. It’s a mistake to try to be. For Groupon, striking fair deals and marketing with integrity would probably be the ones to focus on…
‘Going public’ means just that: If you want to be treated like a big adult company, don’t expect to get let off because you’ve had to grow up fast. Make sure you’d be happy if everyone knew what you were up to. Adverts that make light of Tibet and unrealistic offers probably won’t cut it.
And if you want to hear a little more advice for businesses on this issue, we just published 10 Tips To Cope With Rapid Growthin FreshBusinessThinking.com.
Great game-changing brands share something in common – a strong, driving purpose. Brands like Virgin Atlantic, IKEA, and RyanAir all have a clear sense of purpose, which guides the business and is attractive (or at least relevant) to their customers, employees and suppliers. Goldman Sachs (GS from here on) is a brand with clear purpose - it creates wealth for its employees.Wealth that attracts the smartest and most ambitious talent in the world. This purpose appeals to GS clients because they anticipate the smarts of GS will discover new ways to make money for them too.And so long as the bank’s clients believe in this link, stories and allegations like Greg Smith’s will continue to be storms in teacups. It’s not all plain sailing however. This constant chipping away at GS’s reputation is beginning to impact the employees where it matters to them – in their wallets.
The zeitgeist, fed by energized doe-eyed youth, is demanding better regulation (won’t work), moral responsibility in banks (never happen) and feels that morally bankrupt organisations (aka Banks like GS) don’t represent them.Small beer, since most instances they’ll never be prospects or clients of these banks.
But what happens when this poor reputation begins to impact GS people, as individuals?On leaving the bank, it’s going to be harder for a GS employee to land a plum non-exec or heavy-hitting public sector role. Furthermore, any company they set up will be under increasing scrutiny and skepticism (e.g. Ocado?). This is a shame because today’s world needs people with the GS smarts.It just doesn’t need any sniff of satanic or charlatanic behavior.
Consider the risks
So, is this brand broken?Not yet. But the risks to GS are that its clients start to turn on it, that it begins to encounter problems dealing with various governments or that it starts to lose its talent.
At the moment, the brand still works for GS’s clients – it’s still associated with the smartest people in finance – but again, it’s short term.And right now, it works for employees. Despite what the public thinks, it’s still the place the smartest people in finance want to be. But will they continue to work for an organisation whose reputation taints their future?
But the brand isn’t working for investors as hard as you’d have expected.Reportedly, $2bn dollars were written off GS’s market cap after Smith’s resignation – but bounced back the next day – after investors were reassured that clients weren’t leaving.Investors will have them on their watch lists.But, ever seeking a deal, watch for folks going short at the next PR hiccup.
If Goldman Sachs were my client
If I were a GS client I’d want assurance that my wealth and my interests were being handled properly. But if GS were my client, what would I advise?
The first thing would be to advise against knee jerk reactions to media – this is not an institution that needs a public rebrand (yet) – it does however need to bond with its clients and its people, fast.
Second. GS must know the facts on the impact and implications for clients. Find out if they have been affected and if they have, act decisively: reimburse, re-advise, change teams, get rid of people, change the incentives and reinstate long-termism.The key is to engage clients, reinforce the success and focus everything on them.And when the presses roll with the next bad story – be ready to talk to them immediately.
Third. Understand the implications for your people. Check the culture at all levels, what needs to change? Encourage people to speak their mind, clarify the grey line between dishonesty and self advancement, contribute to a discussion on risk and ensure you’re not limiting their actions.
Beyond this my advice would be to espouse your beliefs.Stop the puffery like the 2010 adverts but be brutally honest, say something with integrity and honour. And if what you say will continue to grate with the public (i.e. we’re here to make money for ourselves and our clients) then have an adult-to-adult conversation – explain you’re not the regulator – tell the industry truths.
Give your people a platform to show their selflessness and how they go on to create good things in the world (once they’ve filled their trousers for the lifestyle they want).I consider it completely appropriate for GS not to have an enormous PR driven CSR programme - the causes it does push have an economic rationale relevant to the GS brand.
GS’s brand is about enabling individuals to do what they want, it creates the ‘can do’ culture and attitude and like it’s clients, it lives with the flip side of this – arrogance.GS shouldn’t try and find a cause everyone can buy into and marshal them into delivering it– rather, it should be a platform to allow the smarts at GS to do what they do best. Having said that I’m unconvinced that a purpose based on 20th century capitalism will carry their brand back to the status they once enjoyed – essentially being the B2B equivalent of Apple.IBM hit it right with their ‘Smarter Planet’ programme, a purpose that guides the brand and resonates with the wider public.Let’s see what the smarts at GS make of it…
Charlie Stottis a Senior Strategist at Wolff Olins London. For more of his thinking on Goldman Sachs, watch him on Reuters here.
Thank you PSFK and The Daily Beast for pointing us to two new currencies we hadn’t heard of. One is called the “Nanto” and the other you might recognize from your laundry room.
No Money? Make Your Own
A French city called Nantes, population 300,000, will soon introduce its own virtual currency to complement the euro and encourage trade between its small local businesses. By next year, participating businesses will be able to pay or be paid in something called “Nanto.”
Accelerated by the financial crisis, Europe has seen a trend of small businesses looking to make more cashless exchanges. The WIR cooperative bank in Basel, Switzerland is already using a similar cashless payment system, but this is the first time a large European city is trying the experiment.
Tide laundry detergent has become the item to steal. According to reports in The Daily, NPR, and The Daily Beast, Tide’s recently become a major target for thieves from New York to Oregon, who are using it as a type of street currency because of its steadily high retail price. According to Planet Money, Tide’s street re-sale is anywhere from $5-$10 a bottle. It’s unclear if people are trading it for other goods, as well as cash.
While it’s hard to find hard data on this “trend,” there are loads of good anecdotes on the Web. For instance, one man in Minnesota stole $25,000 in Tide over 15 months before getting caught last year. It’s apparently enough of a problem that CVS is looking into special security measures to keep Tide on the shelf.
So why Tide and not Wisk or Seventh Generation? According to The Daily it’s all about brand recognition, both in the store and on the street. “Police say it’s simply because the Procter & Gamble detergent is the most popular and, with its Day-Glo orange logo, most recognizable of brands.”
Capgemini’s recent repositioning is even more evidence that even the most conservative companies are wising up to “social” or purpose-driven business – a massive pattern we’ve been charting
Remember the future? Or at least the future of commerce? Always Open. Always On. Always Available. E-commerce was going to take the place of the so-called brick and mortar stores providing the consumer with convenient and immediate solutions to all theirshopping needs. Want to shop at 3am? No problem. Want free shipping? No problem. Never want to deal with a salesperson again? No problem.
This October, a report was published by McKinsey estimating that the Internet has contributed more than a fifth of the GDP growth in mature economies over the past five years. That’s remarkable, especially at a time when these economies are struggling to get their populations back to work––producing and consuming the domestic product. So if the Internet is our ace in the hole for economic growth, and you and I are the prospective producers and consumers of the product in question, let’s take a look at the situation in front of us.
“Banks got bailed out, we got sold out!” is a common rallying cry among the Occupy Wall Street protesters. The deep-seated dissatisfaction with the current banking system has led to a public demand to create real change within the industry. It also points to a major question: how can you innovate in a way that empowers consumers?
BankSimple, now called just Simple, is an exciting possible answer to this question. It opened its doors to its first round of customers this week. Many of us at Wolff Olins are fascinated by the innovative possibilities Simple offers and its potential to turn the banking industry on its head.
I spent Tuesday evening with 2500 women as a guest at the Deutsche Bank ‘Women in European Business’ (WEB) conference in London’s Barbican Centre. It was the 10th anniversary of the forum in the UK and forms part of a platform of annual events around the world that Deutsche Bank hosts for women in the financial and professional services community spanning New York to Singapore.
Deutsche Bank have established themselves as thought leaders in the financial services sector where the proportion of senior female executives in top-tier management remains woefully low. They’ve done this by making a serious investment and a very public commitment across the world to their stakeholders in hosting these public events, and have made it clear that the question is not about ‘fixing women’ but providing them with the right support and perspectives in order to navigate their way, in much bigger numbers, to the boardroom.
The theme last night was ‘Leadership in a New World Order’, exploring the ways in which leaders drive change in an organisation and how leaders need to adapt to the re-balance of economic and political power globally in order to stay competitive. Putting thornier geo-political arguments to one side, two central themes that emerge in this new world order are: connectivity and adaptation. Connect or die. Adapt or die.
From a brand perspective there is no question that Deutsche’s engagement with this high flying group of women has had an impact on its employer brand and has generated substantial goodwill. Over the last decade, they’ve successfully moved these conversations on from the banal and created a highly connected group of like-minded people who are effecting real change both inside Deutsche and within the financial and professional services community.
The problem, however, is that they haven’t moved on with their own thinking in how to take advantage of this forum for real business benefit. There’s no follow-up, no mechanism to communicate and extend the debate post the event, or to engage with individuals to do business with in the future. There appears to be no vision as to how to turn this into a differentiating initiative that actually drives their business and adds to the bottom line.
Deutsche Bank has worked hard to lead a stagnant sector into new thinking on gender balance. I’d really love to see them take that to the next level and connect it with real business benefit. They’ve got the connectivity bit right, now it’s time to adapt or die.
