Opening the Dialog

When Mead Johnson Nutritional began a direct mail program for its Enfamil brand in 1992, it sent mostly coupons to the nation’s four million new mothers. Four years later the Evansville, IN, manufacturer had raised the bar on the marketing of its infant formulas and its drive to wrest share from rival Similac. Mead Johnson transformed its rudimentary direct mail campaign into a loyalty program with monthly mailings packing helpful information, brand checks, and free samples.

Enfamil Family Beginnings wants to “delight every consumer in the process of having a child,” says Mead Johnson director of customer relationship marketing Mitch West. It collects information on expectant and new mothers’ buying habits and preferences through an initial survey when they enroll. The vendor amasses data by asking questions when consumers use an toll-free assistance line, and participate in a points-for-prizes catalog program.

Moms collect labels from Enfamil cans toward seven premiums, including Beatrix Potter-licensed toys and a lullaby cassette.

“We are seeking to understand these consumers better than anyone else,” West says.

Mead drills into its database to segment users so mailings are targeted based on pregnancy states and age of children. “Every piece we send out allows for the consumer to give us feedback. Then we course-correct our program based on what they tell us,” says West.

West feels the three-year-old program has played a major role in Enfamil’s lifting its market share. Mead Johnson has leading 60-percent and 55-percent dollar shares in formula liquids and powders respectively in the 52 weeks ended Jan 3, per IRI.

Manufacturers love a steady customer. Witness the continuity programs that packaged goods vendors seem to be favoring these days. Pillsbury, Nestle, and Kraft all introduced continuity programs last year that kept consumers amassing points for six months or more.

A two-way street Brands in industries including pharmaceuticals, hospitality, and toys are pursuing the goal of turning habitual purchasers into loyal customers. Through loyalty marketing they are finding out what consumers want so they can make more meaningful offers to them.

“Loyalty comes from a brand being able to anticipate and exceed customers’ expectations,” says Robert Passikoff, president of Brand Keys, a New York firm that tracks consumer loyalty.

In 1998, 101 loyalty programs were introduced, 31 percent more than in the previous year, according to DBM/SCAN tracking service in Armonk, NY. They are growing in number because companies in many industries have moved from a focus on becoming better producers to “a fight to get a larger, more profitable share,” says Passikoff.

“Companies are recognizing the fractionalization of the media and the ability that loyalty programs with a data-based marketing component give you for targeting,” says DBM/ SCAN president John Cummings.

“The prescriptions category is very extensively involved in (consumer data collection). They only want to learn a little bit at a time, but a lot of learning goes on over time on consumers’ lifestyles and behavior,” Cummings adds.

General Cinema Theatres, United HealthCare, BellSouth, and Toys R Us last month named Minneapolis-based Carlson Marketing Group for relationship marketing services.

“Relationship marketing is an increasingly important part of smart companies’ marketing mixes,” says CMG Loyalty division vp Dick Dunn. “Organizations are beginning to realize the importance of customer retention, and that they can no longer differentiate themselves in the marketplace on price and product. The key to larger market share is building relationships with your most loyal customers.”

Mining with Marriott Marriott International has enlisted more than 10 million business travelers into its Rewards program by offering travel prizes for points and special overlays with partner brands. In a four-month promotion with Visa that ended in January, club members who paid for stays with Visa cards received bonus points on top of the points they would have normally earned.

Marriott direct-mails special values and targeted communications to specific loyal guests. It studies guests’ lengths of stay and travel patterns and then makes assumptions about their preferences, says Marriott vp for brand and strategic business unit public relations Gordon Lambourne

“We cluster the data so we can tailor special programs and offers to a select, qualified audience,” says Lambourne.

If a member is spending a lot of time at resorts near golf facilities he might get an offer of a special weekend travel deal. Travelers frequenting Marriott properties on Thursdays and Fridays might attract offers of room discounts in Can’t Beat Friday and Together Times awards.

The selective promoting is appreciated by members who don’t want “to be offered a lot of junk they don’t need,” says Lambourne. “We are changing consumer behavior by providing recognition. We want to make our guests even more loyal.”

Going Underground When Sony launched the The Underground – a club for PlayStation video gamers – two and half years ago, it didn’t know much about the passions of the 50,000 fans who sent in registration cards.

“We assumed the early adapters to the system were hard core gamers,” says Sony Computer Entertainment America senior manager for online and direct marketing Colin MacLean. In any case it was a category that “begged for a club” since there is a lot of community activity among console jockeys, and gamers love to learn about the latest innovations and behind-the-scenes news.

Sony built up club membership with a Peer Challenge in which PlayStation users were asked to identify the “sorry ass gamers” who were their friends. It collected more names for its data base of users by creating shocking-pink registration cards for the hardware and inviting users to “get stuff in the mail for free.”

“We’ve positioned ourselves as cool, with an edgy, irreverent style, as opposed to ‘fun,'” says MacLean. Minneapolis-based promotion agency Rapp Collins handles consumer research, club management, and the database.

With Underground membership at one and a half million and rising, Sony marketers are able to peer into the minds of the most loyal PlayStation fanatics. Using mail surveys, a consumer services phone program, and a Web site, the company collects data on how often gamers play, whom they play with, which games they own and prefer, and their future buying plans.

“We get 20-percent response rates on our surveys. These people are so into the brand, they are happy to give us information. They feel it is to their benefit, that they are contributing to the growth of the brand,” says MacLean.

Sony has even used the information to score user segments for brand loyalty. “We have scored five percent of users. But we can project that out.”

Sony constantly interacts with members by offering new incentives and new program features. In a holiday promotion this year, members who redeemed mailed coupons at Pizza Hut received a PlayStation demo disc loaded with seasonal titles. Members have special privileges on the Web-based Underground Radio Network, a weekly half-hour show with a streaming audio track in which three expert gamers discuss new games and accessories. Underground members have exclusive access to an archive from which they can summon up past programs.

As Sony unwrapped a new quarterly magazine in CD form, it rewarded the PlayStation hardcore with the coveted chance to become game Beta testers, soliciting their opinions on demo disks.

Sony’s working hard to keep its users loyal, and away from Sega and Nintendo. They will find it is worth it if national trends apply to the gaming avocation. In many industries, a 5-percent increase in customer loyalty lifts the lifetime profitability of that customer by 95 percent, says Brand Keys’ Passikoff. That’s compelling testimony as to why marketers are spending tons of time and money on loyalty and continuity programs.