These days, whenever we go shopping for groceries, clothes, shoes… staff at the check-out counters always asks if we have a membership card for earning incentive points, and then we’d dutifully take it out and let the staff to clock new points on to it. Bonus points, when accumulated to a certain amount, can be used to redeem gifts, discount coupons, or other offers under the same company group.

The idea of incentive rewards started many years ago with the gas stations (‘green stamps’), the airlines and credit card companies. Now, the idea has caught on as more and more retailers design similar schemes – to keep customers within their belts.

In Hong Kong, loyalty schemes have also been around for quite some time. One of the earlier players is Jusco. Its ‘J Card’ is very popular among housewives who do their shopping daily. This card offers products with discounts, members-only sales days, and newsletters with the latest promotional offers via email or posts.

Octopus card, with its enviable high penetration in the Hong Kong, launched ‘Octopus Rewards’ rebate scheme a while ago. Octopus now partners with different retail outlets to jointly promote loyalty schemes for mutual benefits.

‘MoneyBack’ is another similar scheme launched by Park’n’Shop a year ago. This programme started first with the supermarket chain, but is now extended to other non-supermarket outlets under the Hutchison Whampoa Group – such as Watsons, Fortress, hotels, internet and telephone services… Extending the catchment stores aims to expand the number and range of customers to beyond housewives.

Meanwhile, Jardines has joined hands with HangSeng Bank to launch ‘enJoy Card’ – another reward scheme hoping to share a slice of the already competitive market. Customers can earn reward points at all Jardines’ shops such as IKEA, Mannings, Maxims Catering and more. Although their network of shops is bigger than ‘Octopus Rewards’, their promotion is not as far reaching and therefore, customers still do not know how their reward scheme works.

These bonus point schemes are a type of loyalty programme. From a wider perspective, we call this ‘customer relationship management (CRM)’. There are other CRM methods available of course, such as collecting limited edition items, stamp cards, coupons…. All these have the ultimate aim of customer retention and make them come back for more spending.

The development of CRM is linked to technological advancement. Technology has made possible that a single click will enable marketers to check if we are a regular customer, where we live or work, our spending habits, and our income level. With these kinds of information, companies can customize special offers for their customer periodically.

CRM is a major marketing tool now. Besides offering discounts to customers, CRM also opens the door to new marketing opportunities, such as joint or cross promotions with offer of incentives and discounts and privileges for purchasing across brands. Financial institutions are active exploiters of CRM – their own branded credit cards are tools for capturing customer information for even more promotions.

Further good reads:

CRM Introduction: http://www.exforsys.com/tutorials/crm/crm-introduction.html

CRM data privacy: http://www.theclientsideblog.com/archives/ideas-experiences/the-future-of-crm-data-and-pri/

CRM for smaller business: http://www.youtube.com/watch?v=G0Ln4H_deGU

05 January 2009

Redundancies should be a last resort as businesses review costs in the New Year, the Chartered Institute of Personnel and Development (CIPD) said today.

The CIPD has estimated the real cost of redundancy can reach £16,375 per employee laid off, even before hidden costs like higher labour turnover and a fall in staff productivity are added in.

It is urging employers to plan for recovery by retaining their people, rather than downsizing and risking long-term damage to their business.

CIPD Chief Economist John Philpott said:
“Businesses are under huge pressure right now and restructuring is a fact of economic life that can never be ruled out. But while making people redundant can seem one of the most straightforward ways of cutting costs, redundancy is itself a significant cost to most organisations with a number of direct and indirect or hidden costs. This is particularly true if redundancies are an employer’s first resort in difficult times and have to be quickly reversed by renewed hiring when economic conditions improve.

“While the average direct cost to employers of making redundancies can reach £16,375, on top of this are hidden or indirect costs resulting from the effect of redundancy on survivor employees, such as higher labour turnover and a fall in staff productivity.

“This is likely to be a conservative estimate and provides a hard business case for why redundancies should be a last resort in the downturn. We urge employers to plan for recovery by investing in and growing their people, rather than reducing their workforce.”

The CIPD has created a new formula to help employers realise the genuine cost of redundancy on their business:

Real cost of redundancy = (n ×R) + (x ×H) + (x ×T) + ny(H + T) + Wz(P - n)

Where:
• n = number of people made redundant
• R = redundancy payments
• x = number of people subsequently hired
• H = hiring costs
• T = induction/training cost
• y = percentage quitting post redundancy
• W= average monthly staff salary
• z = percentage reduction in output per worker caused by lower morale
• P = number of people employed prior to redundancies

John Philpott said:
“The formula shows how redundancies can impede quick recovery from the downturn. This doesn’t mean that restructuring can’t take place but it should be with a view to the long term and not short term cost cutting.

“Employers should hold their nerve and focus on retaining talent and investing in the skills of their people. It is these people with their commitment, productivity and ability to add value who will ultimately keep individual businesses and the whole of the UK competitive, and put us in a strong position to recover from the downturn quickly.”

(Source: http://www.cipd.co.uk/pressoffice/_articles/050108Costofredundancy.htm)

Barack Obama was elected the next president of the US on 4 November. His marketing strategies were widely discussed by the media and many of them deemed 4 November as ‘the biggest day ever in the history of marketing’, and Obama himself was even selected as the Marketer of the Year by executives in an annual conference in October.

Advertising Age said Obama’s campaign was a successful branding strategy – with his messages being consistent, simple, and relevant. These are important elements that all marketers should learn from. Obama does not have a long history in the political scene but managed to build up his own brand in 2 years. Moreover, Obama had strong opponents – Hillary Clinton and then later, John McCain. And, being the youngest among them, Obama’s résumé is the shortest. It looked like an impossible battle, but he won by having a better marketing approach than his opponents. This made him stand out from the rest and eventually ‘win the market share’.

1. Consistency
Comparing Obama, McCain and Clinton, Obama had successfully created a single message that is used throughout his campaign right from the start – ‘Change’. In fact, the consistency had forced his opponents to follow him and adopted ‘change’ as a key word in the final part of their campaigns. Clinton’s message was unclear and confusing. From the start of her campaign she was boasting her experience, and then shifted to ‘Countdown to change’, followed by ‘Solutions for America’. McCain, meanwhile, did employed ‘Country first’ as his main message, but changed the tune and called himself ‘the agent of change’. This message came a bit too late.

Not just ‘change’, Obama was consistently calling McCain a clone of Bush. No matter how McCain defended this allegation, Obama insisted that the ghost of Bush’s policy will still be there if McCain moved into the White House. Obama promoted his believes which McCain found it hard to deny.

2. Simplicity
Obama’s message is simple – ‘Change’, which is easy to get into the minds of voters, especially with the economy’s turbulence for the past year. Voters needed ‘change’, a change that could improve their lives, a change that could turn around the economic downturn, all these provoke their inner feelings and allow the whole incident closely connected to voters.

His opponents’ promotion was much more complicated and failed to coin into the minds of the voters.

3. Relevance
Obama has his relentless focus on change, which forced his opponents shifted their devotion to discuss the changes they proposed for the country, and how their plans were different from the previous term. All these talks distracted McCain and Clinton from talking about their strength, for example their experience, their international experience.

Utilisation of social media

Besides keeping his message simple and consistent, Obama’s communication mix was also well praised by marketers. He deployed technology and penetrated into different online and traditional media. He cleverly utilised social marketing tools and had successfully gained the attention of younger voters whom traditionally not interested in politics.

(Screenshot from BarackObama.com)

(Screenshots from youtube.com, 3 Nov 2008)

The above 2 images are taken from their respective youtube.com page with some short introductions about themselves.

Can you spot the difference?

• Obama’s Youtube channel had 18 million subscribers, while McCain’s only had 2 million.
• Obama employed Google checkout online payment systems to provide an easier channel for viewers to donate money to his campaign, and McCain did not.
• Obama set up his video channel on Youtube back in 2006, and McCain catch up the game 5 months later.
• McCain provided detailed instructions to viewers on how to ‘subscribe’ to his videos, while Obama did not.

From the above information, the differences in promotion strategies are obvious:

• Young vs Mature
• New media vs Traditional media
• Web 2.0 vs Web 1.0
• The Long Tail vs 20/80 Rule
• The ability to draw Netizen’s attention
• The demographic profile of voters (age, education, race, class, perceptions….)