With the US financial markets in turmoil and the economy the hottest topic of the Presidential debates, everyone is looking for answers. When the effects of this nasty economy are distilled to the household level, most of us are anxious to know how and when the ugliness might affect our own lives. Once we have a sense of the potential severity, we turn to damage control, wondering where we should invest, what we should buy, and how to trim our budgets.

Let there be no doubt that the insidious nature of evil will play its hand in this cycle. I have seen news reports lately of fraudulent schemes targeting the elderly and other unsuspecting folks. Promises of extra lottery winnings and windfall government payouts have duped those that are feeling desperate and are looking for some quick and easy relief. Message to consumers….while you are busy fretting about your declining 401(k) and shrinking home equity, don’t stop looking at your credit report online and being attentive to everyday ways you can protect yourself against crimes of opportunity. Hint: upgrade your shredder!

Why am I writing on this subject in a blog dedicated to Loyalty Marketing? Well, the foundations of enduring consumer loyalty to a retail brand include trust, confidence, and consistency of service delivery. That said, why marketers employ the Loyalty Asterisk™ as a staple of their promotions is confounding. If you’re not familiar with the term, the Loyalty Asterisk™ is that fine print in which the maze of conditions are outlined which make an attractive offer crumble right before your POS. Several of these have been documented in previous posts, 1-800 Flowers being a recent example.

Over the past week, I have twice been to the ATM to withdraw some cash and was surprised to have the machine eject the previous customer’s card right into my waiting hands. Good thing that I have boy-scout tendencies and was able to return the card to the person hurrying out to the parking lot. For a while I have noticed that few people collect their receipts from pay at the pump stations and only a few more retain their ATM receipts. Now, it seems that people are moving through life so quickly and are so easily distracted that they can’t remember to take their debit card with them. Talk about an invitation to fraud and financial misery. I can’t think of an easier scam. Now the bad guys don’t even have to rig the ATM with cameras and card skimmers, they can just stand around and scoop up the cards left behind.

The learning about the Loyalty Asterisk™ in this scenario is that marketers use it because they can. And I have been wrong to think that consumers actually evaluate all the conditions presented. Now I am believing that people are moving so fast that they intend to send in their rebate forms, fill out their warranty card forms, and pay their “same as cash” purchase within the allotted time period, but just can’t execute the details. When consumers put on the blinders, it offers free license for marketers to send any form of promotional shell game our way without responsibility.

One of the Vice Presidential candidates suggested during the debate that consumers need to shoulder some of the burden for their current circumstances. Many people now reluctantly acknowledge that they should not have turned their house into a credit card via their home equity loan. I hope we can slow down long enough to collect our thoughts - and our ATM cards – if we are to find our way forward in these tough economic times…..Bill Hanifin

Watching the Vice Presidential debates, there was a lot of talk from both sides about bolstering the hopes and fortunes of the middle class. This struck a chord as I reflected on my shopping experiences that same day and realized that retail marketers rely on several promotional tactics that, in our opinion, aren’t truly designed with the customer in mind.

Extended Warranty Protection Plans, Same-As-Cash deals, and Mail-in rebates are all on the suspect list but Mail-In Rebates are the focus of this post. Designed originally as a deferred discount to distract consumer eyes from the “real” price of the product, mail-in rebates came into view years ago and continue to proliferate throughout retailing. Today, they have proliferated across product and category to the point where consumers can’t just rely on reading the “price” shown in big bold type, but need to look at the fine print to see what conditions apply to enjoy the stated price.

Two quick stories will have you nodding your head as they illustrate customer experience in mainstream retailing:

• Needing to replace a mobile handset for a family member, I called the “help” line to find out what deals were available. I was given the prices of specific phones that I was eligible to acquire and was told that a $75 early upgrade fee would apply. The phone we selected totaled up to $125. This price was in my brain when I walked into the wireless store only to learn that it was net of a $50 Mail-In rebate. End of story…..I paid $175 and walked out with a new handset and a rebate form to complete.

• My 19” computer monitor was on the fritz and I had no choice but to shop for a replacement. Prices for 22” monitors ranged from $179 – 295. When my frugal Irish eyes looked more closely at the $179 model, I noticed that the price was net of a $50 rebate. Next to it was a more attractive model with bigger brand name. Since the price was $249, I struggled with the wisdom of paying a higher price and not having to take my rebate “homework” with me. End of story……I am still shopping.

The attractiveness of Mail-In rebates for marketers is summed up in one word: breakage. The burden of cashing in on the rebate falls solely to the consumer. Completing the paperwork properly, including the right documentation, mailing before the expiration date, and spending additional money for delivery confirmation stacks up in favor of the retailer. It is a game that can be played successfully by consumers, yet many of us don’t have the discipline to follow through properly. The fact that Mail-In rebates continue to be a popular pricing tactic is testimony that breakage does benefit the retailer.

From what I have learned about Gen Y purchasing behavior, I wonder if breakage rates will go sky-high across this 80 Million person group. Maybe the only hope for this upcoming generation is out-sourcing. I’ve seen pet-sitters and dog-waste services advertised in the local paper along with cleaning and yard services. Maybe bookkeepers need to add rebate processing to their list of services.

Responsibility lies on both sides of the transaction and consumers need to be educated and disciplined when making purchase decisions. Marketers might consider this Loyalty Truth: whether this is the type of relationship they wish to promote with their customers over the long term. As they continue to employ tactics that force consumers to be detail driven in order protect their interests, the chances of building enduring brand loyalty will be diminished with each transaction…...Bill Hanifin

How often have you seen trophies, plaques, and crystal featured in advertising as evidence that a product or service has received the “highest ranking” by the survey company? If you are channel or web surfing your haste might benefit the advertiser. Associating the award with the brand triggers a quick mental linkage between the two as you log a positive impression in your memory banks and move to the next channel.

If you pop the hood and investigate how these rankings are assembled, you’ll know why Gen Y consumers rely increasingly on recommendations received through social networking sites as well as word-of-mouth from friends and family.

The flaw in the system could not have been more clearly stated than in the sign next to where I was swiping my debit card to pay for car repairs at a local dealer.

“Did you know that a score of 9 or less is a failure? Please grade us “10” or tell us why you can’t.”

I paraphrased this a bit, but imagine if this rating system were applied to kids in school or “us” at work. Try telling your child that anything less than an “A” is a failure and see how motivated they will be to climb that mountain. Or, imagine that the annual employee performance evaluation allowed raises only for those scoring a perfect 10 across the matrix of KPI’s (Key performance indicators) outlined by the boss.

Insisting on delivering a perfect 10 does nothing but dilute the scoring system itself. There are few customer experiences which are perfectly executed and there should be nothing wrong with being graded less than 10, especially if comments are provided to help interpret the score.

The proactive management of customer satisfaction scores continues “after the sale”. Every time I take my VW to the shop, I receive a phone call asking me to participate in a “short survey about my experience”. The first call comes within 3 days of my visit and the firm will continue to call every other day or so for up to 2 two weeks until I speak with them. Even though they tell me that participation is voluntary, it clearly is not, for they will chase me down like a hound-dog on a good scent trail.

Vladimir Putin might approve of this methodology. Consumers WILL participate in surveys and they WILL give us a rating of 10. Flip this around and imagine how the conversation goes between the sales rep from the survey company and a large auto dealer. Does the supplier go beyond assurances that they will manage the process and seek high participation levels, making promises to deliver the highest scores ever? Do they bring a catalog of award trophies to that sales meeting, encouraging the client to choose the one they will advertise before the campaign even kicks off?

Much has been written about how we have raised an entire generation of young people on participation trophies and certificates in fear of hurting someone’s feelings. We can argue that elsewhere, but I do not believe this approach helps consumers make better decisions about spending their hard earned money.

The appeal of recommendations made in social networking sites is the focus on content and not integers. I may not know the difference between a 9 and 10, but I can learn a bunch from reading a description of a post-sale service experience from another VW owner.

Marketers would be better served to change the game before their customers stop reading their survey results. Making the process more transparent will encourage more subjective input from customers. Don’t be afraid to learn what your customers really think about you. If you can’t stand this idea and stick with the old system, dissatisfied customers will leave anyway. I think anything less a 10 has the sound of a slamming door as they go across the street! …………. Bill Hanifin

Some days things just come together. I woke up remembering that it was my Mom’s birthday this week and received a serendipitous email from 1-800-Flowers offering me a special deal.

My eye was instantly drawn to “Free shipping and No Service Charges” as I clicked through to order some roses. After spending time looking for the just the right arrangement, I completed the order form, entered the promotion code and clicked “Submit”. To my surprise, I received a message informing me that my item selected was not part of the promotion.

I knew that I had been afflicted by the most dreaded and harmful diseases of Marketers – the Loyalty Asterisk™. Have a look at my earlier post describing the Asterisk. Marketers are an interesting sort – they marshal tremendous creative resource to come up with inventive promotions and offers and then undermine their hard work with annoying  conditions driven by the fine print.

Consumers are desperately seeking transparency in today’s retail world. We don’t want to feel the need to call our lawyer or our neighbor who works in procurement to dissect every offer we see. It should be simple, clear, and easy to decipher.

Adopting a marketing strategy founded on transparency creates confidence. A series of confidence building transactions plant the seeds of trust. And trust is the foundation of enduring loyalty that surpasses price and service interruption. This form of emotional loyalty is the holy grail of retailers, hoteliers, and all others.

1-800-Flowers lucked out with me. After searching for flower arrangements that qualified for the promotion and being thoroughly disappointed by the selection, I reverted to the roses that I wanted most. Maybe a hurried lifestyle worked in their favor and in the end, the roses sent were beautiful by all accounts.

The longer term impact for me is to harden my shell of skepticism towards email offers and in particular this online retailer. It was certainly not the first time that I knew the “bloom was off the rose” of promotional marketing, but it does make me wonder why it is so hard to create an offer without undermining conditions.

If the offer made is financially sound, then the retailer should not be afraid to let everyone in on it. And, if the offer is so narrow that the asterisk is required, then the marketing team should go back to the garden and plant more seeds in hopes of a better crop…………Bill Hanifin

The consummation of loyalty love is found in the passion of redemption. Too bad that I have heard from far too many people that as hard as they try, they can’t reach this pinnacle of loyalty emotion. “I’ve got a bazillion points and just can’t seem to redeem them” goes the self pitying refrain.

Finding satisfaction in loyalty point redemption has never been a problem for me. My ease of arriving at the intersection of point availability and interesting reward results from a blend of determination, creativity, and unique travel patterns.

Just this past week the mixer was filled with hotel reward points and a rebate gift card to blend up an impromptu weekend away. My intentions for the weekend were simple and partially motivated by the ability to pull it off “for free”. The reality of cashing in the rewards was another story and an instructive one for any program sponsor.

The plan was to drive a short distance from home to partake in a bike race while my spouse enjoyed a lazy morning in the hotel free of daily demands. Checking into the hotel, I asked if I could have a first floor room. Noticing the parking lot mostly empty, I thought this would be a slam dunk to accommodate. After some time spent grimacing at the green screen, the desk clerk groaned and relayed that “my reservation would not permit a change”.

Without saying it directly, I gathered that a “rewards” reservation had some limitations. Like water on a duck’s back, the comment rolled off and we proceeded to the third floor to find our room……next to the elevator. Now I was convicted with the feeling that reward reservations come with an asterisk indicating “place reward guest in least desirable room even if hotel is empty…under no