Retailers are continually endeavoring to understand the evolutionary metrics of their customers. The most difficult demographic and shopping profile analytics occur in the on-line space, as that arena does not have the historical data available compared to long standing, traditional brick and mortar sales and acts as a continuous moving target.
Most web merchants, and multi-channel merchants, rely heavily on Internet affiliate programs to drive traffic and sales to their sites. In this case, the debate has always been – quantity vs. quality. The old sales rule of 80-20 seems to be closer to 90-10 relative to affiliate driven traffic – with big box merchants standing on both sides of the equation.
At this point in time our branded BSP Rewards Malls are almost 100% web based (with a few test exceptions). We have researched the space extensively and it seems that we have built the largest on-line mall encompassing nearly 700 merchants, over 100 gift card merchants, over 7000 local restaurants, a catalog of over 200,000 discounted merchandise items and a soon to be launched discount coupon program that will include hundreds of thousands of in-store merchant locations.
Standard affiliates programs drive traffic and sales but we designed our model to concentrate on the high affinity (quality) programs that drive the most traffic/sales - affinity loyalty.
Our name, BSP is an acronym for Branded Service Provider. We are the engine, data base maintenance, communication, viral marketing, customer service, etc. – private branded platform for a variety of for profit and non-profit organizations. Accordingly, there is a degree of affinity that ranges from low to high depending upon the client and their organization type and their relationship with their customers and members.
We have built many private branded malls and our clients have stated a wide variety of reasons to have us do so. The reasons vary and are multiple ranging from loyalty, continuity and value added benefit to enhanced traffic, sales, awareness, continuous communication, speed to market, low cost of set up/administration and in some cases – revenue share. They particularly like the fact that our program is MERCHANT FUNDED (by the nearly 700 participating merchants) and they as a client, reap the benefits on an extremely low to even a no cost basis.
So now let’s get back to the loyalty aspect of today’s blog (as I seem to have delved deeper into the reasons rather than just the results).
Our clients have a customer and/or member base that have a varying degree of affinity and loyalty to them. We build branded programs for these clients and the clients then market the program as their own (which it is) - to their database. Accordingly, the client is in reality, our affiliate therefore brings of much higher quality to the table than if we targeted to a non-related quantity of non-interested affiliates that we could acquire through affiliate programs.
Accordingly, we are becoming a high sales producer for our participating merchants as we encompass a higher affinity, more motivated, shopper. We combine a super mall with the added incentive of giving our shoppers cash value points from every single participating merchants which of course produces- a large number of motivated shoppers. Especially when that shopper can accumulate the points from all as a “common currency” and spend them back everywhere for virtually everything they can imagine.
Our clients and merchant partners are seeing have seen industry statistics whereby the highest traffic and sales come from loyalty program members, and especially if those shoppers receive added value in the form of desired rebates.
According to the September 2007 issue of Internet Retailer Magazine, merchants benefit to a greater degree when sales are generated from loyalty sites (like the BSP Branded Malls are) as they offer something that the retailers can’t offer themselves – affinity relationships, and in our case, common currency rebates. The research proves that customers visit their loyalty sites more regularly than they do a particular merchant site and having a presence on those affinity sites is a valuable traffic driver to those merchants.
The bottom line is that loyalty sites encompass a higher-grade customer, who visits their affinity mall more often, and has a particular desire to help their organization, therefore drives a higher degree of traffic and sales to participating merchants. The results are enhanced further when the customer is automatically given a cash value added incentive with their purchase.
Hence, BSP has developed a program that sells merchant gift cards, drives sales to merchant web sites, and is advancing inroads into brick and mortar locations – therefore having the ability to add revenue for all 3 of the merchant divisions. …How sweet it is.
Staying ahead of the curve regarding content, merchants, enhanced incentives and increased member benefits is the interesting part of the game……..again that is another story for another time.
Monday, September 24, 2007
Friday, September 14, 2007
Martin Berns - Rewards Mall
We have now reached the point of how we had to design, re-design and evolve into a working model relative to the over 675 merchants in our BSP Rewards mall.
As I mentioned previously, merchants want to enhance revenue but they are reticent to offer their trademark to companies that do not fit their criteria. (Let’s change “reticent” to “overwhelmingly protective”).
They have spent many years and an enormous amount of money building their name and reputation and are justifiably hesitant to allow it to be associated with any activity that could tarnish their name. Additionally, it is not worth their effort to establish a relationship unless they can forecast justifiable economic benefit. They are presented programs everyday whereby some entrepreneur shows them pretty graphs and overwhelming projections as to the extent of business they will generate for that retailer.
The merchant has heard it all and says to himself/herself “Another lunatic who believes he will conquer the world”…. and then passes on the program. They are very particular on whom they approve and factor in aspects that go beyond concept and background – it comes down to the basic questions. “How many members do they have? How many of those members are buyers we don’t already have. Do the members match our demographic? How much revenue can they actually generate?”.
When I was young the process of approval was simple. You went to the caveman selling dinosaur meat at the bottom of the hill and got a quick yes or no as to whether or not he would also sell your wooly mammoth tusks. Today the process is multi-layered.
The main benefit to the merchants is of course the prospect of new and additional sales revenue. The BSP Rewards program added unique aspects including advertising and marketing on multiple malls with the merchant only paying for a successful sale. We also appoint the merchants as authorized redemption centers whereby they actually receive the redemption profit, increased traffic and the up-sell potential….along with a special communication element.
But let’s skip to the part whereby we had a company and a program that the merchant liked and enough members for them to test their toe in the water. This is when we learned the full evolutional extent since the caveman. The sales process to the merchant actually turned out to necessitate a series of three separate sales and we had to adjust our approach, marketing and presentation accordingly.
Each major retailer normally had at least 3 separate divisions we were interested in bringing into the program: Internet, gift cards and in-store. Not only were they disparate operations, each considered itself in competition with the other two divisions.
We were therefore placed in the position of having to prepare materials that targeted the requirement of each department….and in many instances departments were sometimes represented by organizations outside of their own company.
……..again that is another story for another time.
As I mentioned previously, merchants want to enhance revenue but they are reticent to offer their trademark to companies that do not fit their criteria. (Let’s change “reticent” to “overwhelmingly protective”).
They have spent many years and an enormous amount of money building their name and reputation and are justifiably hesitant to allow it to be associated with any activity that could tarnish their name. Additionally, it is not worth their effort to establish a relationship unless they can forecast justifiable economic benefit. They are presented programs everyday whereby some entrepreneur shows them pretty graphs and overwhelming projections as to the extent of business they will generate for that retailer.
The merchant has heard it all and says to himself/herself “Another lunatic who believes he will conquer the world”…. and then passes on the program. They are very particular on whom they approve and factor in aspects that go beyond concept and background – it comes down to the basic questions. “How many members do they have? How many of those members are buyers we don’t already have. Do the members match our demographic? How much revenue can they actually generate?”.
When I was young the process of approval was simple. You went to the caveman selling dinosaur meat at the bottom of the hill and got a quick yes or no as to whether or not he would also sell your wooly mammoth tusks. Today the process is multi-layered.
The main benefit to the merchants is of course the prospect of new and additional sales revenue. The BSP Rewards program added unique aspects including advertising and marketing on multiple malls with the merchant only paying for a successful sale. We also appoint the merchants as authorized redemption centers whereby they actually receive the redemption profit, increased traffic and the up-sell potential….along with a special communication element.
But let’s skip to the part whereby we had a company and a program that the merchant liked and enough members for them to test their toe in the water. This is when we learned the full evolutional extent since the caveman. The sales process to the merchant actually turned out to necessitate a series of three separate sales and we had to adjust our approach, marketing and presentation accordingly.
Each major retailer normally had at least 3 separate divisions we were interested in bringing into the program: Internet, gift cards and in-store. Not only were they disparate operations, each considered itself in competition with the other two divisions.
We were therefore placed in the position of having to prepare materials that targeted the requirement of each department….and in many instances departments were sometimes represented by organizations outside of their own company.
……..again that is another story for another time.
Thursday, September 6, 2007
Martin Berns Rewards Mall...
I think its time for me to explain our philosophy relative to building rewards malls. The model is really simple. Define the participant groups, ask what they want…..and then build to suit.
There are literally millions of rewards and loyalty programs in the market place -Everything from credit cards, to big box merchants, to airlines to my favorite local yogurt store. Our task was to research the market, choose the aspects that worked and then add our own proprietary elements…..and unique platform to attract participants.
There are 4 basic participant groups involved in each private branded web mall that we build.
1) The individual members
2) The merchants
3) The member providers who enroll their members
…and of course the all important number 4 – the clients we build the rewards malls for.
When you are trying to build a large national rewards program you are faced with the age old question…which comes first, the chicken or the egg? The members want to be able to shop with a large number of recognized merchants before they join and the merchants require a large number of members before they participate.
A few years ago, as a startup, we had to utilize a small degree of smoke and mirrors and work a little magic….and make sure we designed a program and platform that was unique, sustainable and rapidly expandable. This meant applying our knowledge about each participating group simultaneously and quickly.
Let’s take a look behind the graphic you see above.
Members are just like you and me. We would all like something free or at least as close to it as possible. Studies show that some of the main detriments to any rewards program are:
Takes too long to earn enough points and is therefore not normally exciting
Point values are hidden so consumers don’t understand the value
Closed loop systems (earn and redeem at one particular merchant) are too limiting
Open loop systems (earn points that can be spent for products other than at the giving merchant – like air miles, catalog items or gift cards) offer limited redemption
Programs are normally based upon a breakage model (issue the points and set up blocks against using them)
As you can see in the graphic above, we set out to eliminate those objections. The additional benefit is that the member can earn and accumulate points from over 650 merchants in our mall and then spend those points like cash at any of those participating merchants for anything and everything they wish. Every point = $1.00 so it is easy to understand.
Members can even load their points onto a BSP Rewards stored value card and spend them like cash everywhere MasterCard (and soon Discover Card) are accepted. They even earn points on their points if they spend them with a participating merchant.
Now that is what is called rapid point accumulation combined with ease of spending and almost the total universe of redemption. The member spoke, and we listened.
We facilitate and encourage members to spend their points (usage model) as it makes them happy to do so and our participating merchants love it.
That brings us to the next participant group the merchants. They had their own wish list and it was even more complex.
But again, another story for another day.
There are literally millions of rewards and loyalty programs in the market place -Everything from credit cards, to big box merchants, to airlines to my favorite local yogurt store. Our task was to research the market, choose the aspects that worked and then add our own proprietary elements…..and unique platform to attract participants.
There are 4 basic participant groups involved in each private branded web mall that we build.
1) The individual members
2) The merchants
3) The member providers who enroll their members
…and of course the all important number 4 – the clients we build the rewards malls for.
When you are trying to build a large national rewards program you are faced with the age old question…which comes first, the chicken or the egg? The members want to be able to shop with a large number of recognized merchants before they join and the merchants require a large number of members before they participate.
A few years ago, as a startup, we had to utilize a small degree of smoke and mirrors and work a little magic….and make sure we designed a program and platform that was unique, sustainable and rapidly expandable. This meant applying our knowledge about each participating group simultaneously and quickly.
Let’s take a look behind the graphic you see above.
Members are just like you and me. We would all like something free or at least as close to it as possible. Studies show that some of the main detriments to any rewards program are:
Takes too long to earn enough points and is therefore not normally exciting
Point values are hidden so consumers don’t understand the value
Closed loop systems (earn and redeem at one particular merchant) are too limiting
Open loop systems (earn points that can be spent for products other than at the giving merchant – like air miles, catalog items or gift cards) offer limited redemption
Programs are normally based upon a breakage model (issue the points and set up blocks against using them)
As you can see in the graphic above, we set out to eliminate those objections. The additional benefit is that the member can earn and accumulate points from over 650 merchants in our mall and then spend those points like cash at any of those participating merchants for anything and everything they wish. Every point = $1.00 so it is easy to understand.
Members can even load their points onto a BSP Rewards stored value card and spend them like cash everywhere MasterCard (and soon Discover Card) are accepted. They even earn points on their points if they spend them with a participating merchant.
Now that is what is called rapid point accumulation combined with ease of spending and almost the total universe of redemption. The member spoke, and we listened.
We facilitate and encourage members to spend their points (usage model) as it makes them happy to do so and our participating merchants love it.
That brings us to the next participant group the merchants. They had their own wish list and it was even more complex.
But again, another story for another day.
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