APRIL 2014 TRIPLE PLAY BUSINESS + GOVERNMENT + NON-PROFIT. How Loyalty Creates Shared Value In Today s Creative Partnerships

Transcription

1 APRIL 2014 TRIPLE PLAY BUSINESS + GOVERNMENT + NON-PROFIT How Loyalty Creates Shared Value In Today s Creative Partnerships

2 page 1 Creative partnerships are driving the triple bottom line for many of today s innovative companies, creating win-win-win scenarios in the emerging sector of non-transactional loyalty Just a few years ago, sustainability was a fringe concern. Today, having an authentic environmental or social responsibility program has become table stakes for corporations. Is yours a sideline feel good effort? Or does it drive meaningful, sustainable change that actually helps grow your business? The marketplace is seeing a convergence of factors that makes sustainability and social change initiatives key to future business success. The world is facing complex social and environmental challenges. Governments are asking businesses for help in changing behavior on a mass scale; not-for-profits are flatlining as new donors would rather give time than money; businesses are searching for fresh differentiators and new growth engines. Governments are asking businesses for help; not-for-profits are flatlining as new donors would rather give time than money; businesses are searching for fresh ways to differentiate themselves. Informed, discerning consumers are also pushing for their favorite brands to show sincere concern for what is often called the triple bottom line a measure of financial, social and environmental results. Multi-sector partnerships are a strong tool to help all partners achieve their goals, and loyalty marketers are uniquely positioned to optimize the positive impact of these efforts. For years, companies have been bettering the world through traditional corporate responsibility initiatives, and this remains important. But corporate leaders are evolving and moving beyond this threshold to integrate corporate and brand strategy. The result is more powerful social change resulting from what we call shared value in which companies can post earnings while helping solve society s problems. Shared value increases the corporate bottom line, and creates internal dedication to a large, long-term strategy with maximum impact. As well, a dedication to social good demonstrates the authenticity of a brand s purpose and principles, and thereby connects more deeply with customers. Sharing customer interests, aspirations and values through campaigns aimed at making meaningful behavior change helps the world while also building long-term customer relationships.

3 page 2 Loyalty leads the way Who better to lead customer-driven efforts than the marketers who have created successful loyalty programs? With the marketing know-how to change behavior, loyalty program managers are adept at forging and maintaining partnerships with other organizations, often a key to the success of such initiatives. Who better to lead customer-driven efforts than loyalty marketers? Loyalty leaders have the tools and skills required to drive continuous impact. Loyalty programs have unparalleled reach not only into the volume of their membership lists but also into the hearts of those members. When a popular and respected brand issues a call to action and offers incentives, those members can be quick to respond. At the AIR MILES Reward Program, Canada s leading coalition loyalty program, our successful partnerships have taught us several valuable lessons about the impact that change initiatives can have on the world: New marketing tools, such as a popular rewards program targeting loyal members, can extend the power of an organization s existing communications initiatives. As a proven motivator for behavioral change, offering the right rewards can motivate people to try a new activity, even if it requires effort or commitment. By offering the right reward via the right channels, an organization can educate and attract new cash donors and new participants in fundraising efforts.

4 page 3 Success Story: One example of shared value affecting positive change A four-way Canadian partnership between a grocer, a provincial ministry of health, the Heart & Stroke Foundation (a not-for-profit) and AIR MILES was formed to address critical health and medical issues in the general population. At first glance, it may seem that these very different organizations might have conflicting goals and motivations, but this unique cross-sector partnership paid off for everyone. Tapping into the proven incentives, consumer reach and marketing power of the AIR MILES Reward Program proved loyalty s power to create meaningful behavior change. In an effort to stem rates of cardiovascular disease, cancer and diabetes, the health ministry wanted to encourage the population to eat more fresh produce and low-sodium foods. The ministry s goal was to reward healthy behaviors in order to create habits that would reduce hospital stays and healthcare costs in the long run. Healthy food choices were already easily identifiable on grocery shelves thanks to the Heart & Stroke Foundation s Health Check program which had the branded stamp of approval on many packaged foods. The Heart & Stroke Foundation hoped to increase awareness for their healthy food certification and food choice guide, while the grocer aimed to raise sales of those products and fresh produce. By giving shoppers reward miles in exchange for healthy food purchases, this loyalty-driven initiative created significant gains for all involved. The grocer saw a significant increase in produce sales, and a substantial increase in overall sales of Health Check items. As well, millions of targeted impressions reached consumers via a carefully integrated marketing campaign, raising visibility for the Heart & Stroke Foundation. The high impact of this campaign even boosted healthy food sales among non-program members who weren t earning rewards for their purchases. This success story is just one example of the type of shared value that can be created by the unique aptitude of loyalty programs. More and more companies are embracing social causes such as education, health, and environmental care through a desire to use organizational resources to affect positive change and strengthen good corporate citizenship. Loyalty programs can drive that behavior change.

5 page 4 The transformative fourth stage Companies were once content to conduct straightforward social initiatives such as donating money to a cause, but they now must find more active and proactive ways to make a difference. Generally, companies move through a series of four stages, although some jump directly to a later stage. Stage1 Stage2 Stage3 Stage4 The Socially Aware. Most businesses recognize the need to shift from monetary contributions to action-based programs. In evaluating their efforts and establishing baselines, they re off to a good start, but it s only a start. Basic efforts such as reducing corporate environmental footprints are table stakes in today s marketplace. Consumers are pushing for more significant action. The Strategic Players. This tier understands that some causes are important enough to their customers that the companies have moved from self-contained programs to an ongoing, enterprise-wide focus on the causes that best fit their corporate ethos. Nissan, for example, now uses its research and development efforts on environmental product improvements, such as lower fuel consumption and development of electric technologies. The Leaders. These companies rally customers to action, devoting their resources. Walmart uses its purchasing power to encourage companies in its supply chain to adopt environmentally friendly processes, and has cut its own use of electricity with the green-friendly initiative of dimming lights at retail locations during the day. Patagonia donates 1% of all sales to environmental causes, brings experts to give store lectures, and leads customer eco-trips for environment protection activities. This authentic commitment delivers on their brand promise, attracting and retaining loyal customers. Those in the Leaders category provide continuous mechanisms for consumers to embrace and exhibit more socially conscious behavior. The Transformers. These companies create groundbreaking ways to embrace sectors that are not on the traditional radar of cause marketers, while also creating a powerful and scalable business model. RecycleBank, for example, created a program which brought residential recycling to US cities that had none. In this triple-win program, cities received new revenue sources from the resale of the recyclable material, citizens earned meaningful rewards, and the environment benefited from less waste going to landfill.

6 page 5 Success Story: Leveraging unlikely partnerships AIR MILES discovered a Transformer opportunity from an unexpected direction: the public sector. Partnerships between government agencies and loyalty marketers make perfect sense. Government agencies have mandates for creating awareness and action with their programs and loyalty marketers have immense reach and a proven ability to drive behavior change. The power and influence of a loyalty program can help a government agency achieve goals quickly and cost-effectively. The Ontario Power Authority (OPA) is the government agency tasked with meeting the province of Ontario s electricity needs, which includes saving power, planning for the system s future and securing sources of clean energy. By law, the OPA must make customers aware of the need to save electricity and help local electricity providers achieve their conservation targets. Previous conservation efforts through local distribution companies needed a boost, and the OPA had to find a way to build awareness and conservation action. One of their early education and awareness programs urged residential customers to pledge to reduce usage of electricity. OPA began with a paid mass-media advertising campaign to drive pledges. It drew almost 21,000 Ontarians who gave the pledge, but OPA needed stronger participation and more action from participants. AIR MILES helped OPA create a new strategy and a new program. First, AIR MILES recommended replacing mass media advertising with targeted messaging. Next, OPA awarded 20 reward miles to AIR MILES Collectors who pledged to conserve electricity. Also, if Collectors recycled an energyinefficient refrigerator or freezer, they earned another 100 reward miles. Collectors could also earn 100 AIR MILES reward miles for enrolling in the Peaksaver PLUS program, designed to save electricity at peak times. Referring a friend to the saveonenergy pledge earned an additional five reward miles. In its first year with OPA, AIR MILES generated 133,000 pledges, increasing program participation by 530%, while cutting costs by two-thirds. The program exceeded its goal of increasing appliance pickups, with 20% of Ontarians who committed to getting rid of an old refrigerator or freezer actually doing so. By using only AIR MILES targeted communication channels instead of mass marketing, OPA slashed cost per acquisition by over 50%. For Peaksaver PLUS, almost 50% of OPA customers pledged to enroll, and 11% followed through, well above expectations. By using the power and reach of the AIR MILES Reward Program, cost per activation fell by 50%.

7 page 6 Such initiatives can be successful for the cause as well as for all of the organizations involved. They can benefit for-profit companies in a myriad of ways, including: Greater employee engagement. Studies show that being part of a company committed to social causes boosts employee morale, engagement, productivity, retention and recruitment. These companies enjoy better work environments and reduced turnover costs, while getting more production and innovation from their workers. Brand halo effect. Companies have discovered that the visibility of launching a program like this pays off in building loyalty with their customers. The association with cause-based initiatives allows companies to demonstrate to their customers dramatically, economically, and forcefully a commitment to goals that go beyond the bottom line. Profits. Innovative programs drive revenue from new sources. They also spark creative thinking which can lead to additional profit-generating opportunities. Stronger loyalty from current customers is a powerful payoff. Furthermore, new customers will be attracted to the brand, creating even more dividends. Rather than sacrificing profits to achieve these goals, companies can use synergies to grow while helping the world around them. By tapping into the strengths of each party involved, everybody wins which is the definition of shared value. The importance of authenticity Companies can use synergies to grow while helping the world around them. More than any other factor, the key to successful transformative cause marketing is establishing clarity of purpose, plus belief in the value of the activation of this purpose. Obviously this commitment is fundamental to not-for-profits and government agencies, but the strategy has to also be meaningful in a significant way to the for-profit entity. From that commitment, the initiative gains the authenticity on which everything is built. For example, Walgreens debuted its award-winning Balance Rewards program in the fall of In less than a year, the program s 72 million members made it the largest retail loyalty program in the country, responsible for increasing year-over-year sales and basket size for the company by over 4%. Balance Rewards works in part because it is a natural brand extension, based on a wellness strategy that resonates with Walgreens shoppers. Similarly, AIR MILES partnered again with the Heart and Stroke Foundation on a different health initiative. According to the Foundation s research, nine out of ten Canadians have a risk factor for heart disease and stroke, and the incidence of these conditions is increasing at an alarming rate. This crisis matched a primary area of impact for AIR MILES: health.

8 page 7 Success Story: Motivating heart health AIR MILES helped the Heart and Stroke Foundation develop an effort in which people received reward miles for participating in the following programs: Healthy living mobile app Blood pressure action plan E-tools risk assessment, online support, donations Heart Smart family e-newsletter Heart and Stroke lottery prize This initiative exceeded its campaign goal by 281% AIR MILES designed an incentive-based offering specific to each of the Heart and Stroke Foundation s programs. The results exceeded all expectations: Mobile apps experienced over 9,241 successful completions and downloads in a four week period. The number of downloads after the launch of the first was 13 times higher than previous efforts. Over 14,360 people signed up for the Blood Pressure Action Plan in one month; 14,078 signups were AIR MILES Collectors. This initiative exceeded the campaign goal by 281%. In the first four and a half days, the partnership drove more E-tool Risk Assessment completions than the Heart and Stroke Foundation marketing had achieved in the past two and a half years. An E-tool donation offer also drove a significant number of new, high-value donors to the Foundation. Nearly 32,000 people signed up for The Heart Smart enewsletter in just four months.

9 page 8 Every business looks at the bottom line, and AIR MILES is no different in that respect. But the world is changing, and there are fresh ways to contribute to that bottom line. Boundaries are blurring between business and social initiatives, as creative partnerships combine assets in new ways to drive both profits and social change. It s time for companies to create shared value initiatives, and lead the charge into a world where we have one shared focus on building overall value for the triple bottom line. Social change partnerships create an economic and competitive advantage for businesses, while also paying off for customers, governments, not-for-profits and citizens. It s our shared world, and we can make an impact by creating shared value. Let s get started.

10 page 9 ABOUT The Author ANGELA SIMO BROWN is the General Manager and Co-Founder of AIR MILES for Social Change, a division of the AIR MILES Reward Program which inspires and rewards Canadians for making healthier and more environmentally responsible lifestyle choices. Angela has been instrumental in developing innovative program partnerships with more than 30 organizations across the public, not-for-profit and private sectors that together have driven record increases in positive behavior change in healthy living, energy conservation and increased transit use. Angela holds a degree in Business Administration from Ivey School of Business at Western University. ABOUT THE AIR MILES Reward Program Founded in 1992, the AIR MILES Reward Program is Canada s premier coalition loyalty program with more than 10 million active Collector accounts, representing approximately two-thirds of all Canadian households. AIR MILES for Social Change is a division of AIR MILES that partners with government agencies, energy utilities, transit service providers and non-governmental organizations to leverage the value of AIR MILES reward miles. The AIR MILES Reward Program allows Collectors to earn reward miles simply by doing their everyday shopping at more than 220 leading brand-name Sponsors, representing thousands of retail and service locations across Canada and leading global brands online. The AIR MILES Reward Program also allows Collectors to indulge in more than 1200 leisure, entertainment, merchandise, travel and a range of accredited, environmentally-friendly lifestyle rewards. With AIR MILES Cash, Collectors can also have the flexibility to instantly redeem their AIR MILES reward miles in-store towards many every day and high value purchases like gas, grocery, drug store items and home improvement purchases at participating sponsors.

11 page 10 ABOUT LoyaltyOne LoyaltyOne is a global leader in the design and implementation of coalition loyalty programs, customer analytics and loyalty services for Fortune 1000 clients around the world. LoyaltyOne s unparalleled track record delivering sustained business performance improvement for clients stems from its unique combination of hands-on practitioner experience and continuous thought leadership. LoyaltyOne has over 20 years history leveraging data-driven insights to develop and operate some of the world s most effective loyalty programs and customer-centric solutions. These include the AIR MILES Reward Program, North America s premier coalition loyalty program; a majority stake in European-based BrandLoyalty, one of the largest and most successful campaign-driven loyalty marketers outside of the Americas; and a working partnership with Latin America s leading coalition program, dotz. LoyaltyOne is also the owner of COLLOQUY, a group dedicated to research, publishing and education for the global loyalty industry. LoyaltyOne is an Alliance Data company. For more information, visit. Connect with LoyaltyOne facebook.com/loyaltyoneco