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The argument for rewarding consumers' time with loyalty points

The argument for rewarding consumers' time with loyalty points

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Do you like receiving rewards from companies for participating in their services? Hal Brierley knows you do. That's because Brierley, the chairman of ...

Do you like receiving rewards from companies for participating in their services?

Hal Brierley knows you do.

That's because Brierley, the chairman of customer loyalty consulting firm Brierley+Partners, is the inventor the world's first airline loyalty system, American Airlines' AAdvantage.

Now, as CEO of e-Miles, which specializes in direct online marketing, Brierley is building a whole new business model around that behavior.

E-Miles partners with clients to reward customers for their time. That means spending minutes watching commercials or viewing sites in exchange for points for their favorite loyalty services, such as Hilton HHonors and US Airways' loyalty program. E-Miles currently has more than 2 million active users who have opted to view ads in exchange for points.

I spoke with Brierley about what makes consumers so willing to give up their time for loyalty points.

SmartPlanet: What's the theory behind e-Miles as a business?

Hal Brierley: I’m convinced the big idea today is rewarding consumers for time, since time is our most valuable resource.

Over the last 25 years we've developed what we call ‘the art of relationship management.’ We work with 175 clients in designing programs, and one of the real keys is listening to the consumer. We listen to the kind of relationship a consumer wants with a company. That’s part of why we built e-Miles. Consumers love to be rewarded for time, and appreciate the fact that an advertiser values their time.

SP: How does e-Miles work?

HB: Members are invited for a loyalty program. If they'd like to be rewarded for time to listen to messages, they opt-in to e-Miles. We collect information from them as to what and how much they’d like to watch, and we serve to them advertisement that fits the interest they have. In order for a member to receive a reward for engaging, members must answer four or five questions. One question is, “Would you like to hear more from this retailer?” The following week, 88 precent watched a video from that retailer.

Consumers are working harder and haven’t lost their interest in the programs. Research confirms that the members of airline programs are as actively collecting miles; same for hotels. Consumers are more anxious to earn savings by being loyal. In this time, if someone says spend $50 and you'll get $5, people will pay attention.

Companies are more than ever trying to create e-based relationships. It's dramatically cut the cost of building a direct relationship with consumers [compared to] 10 years ago. For example, we can maintain a database for a fraction of what it cost years ago.

SP: How does e-Miles avoid "spamming" its members?

HB: E-Miles has eliminated the need for e-mail because when you sign up, you get a personal "ad" gateway -- a personal site for you. You come to the site at a time for your choosing and have a spam-free environment to view advertisers you want to hear about and who want to contact you.

You want to reach out and establish a relationship with a broad base of consumers who are buying your product or a competitor’s. You want to cast a broad net, and with e-Miles, you can reach a large audience. Loyalty, then, is at the end. You’re getting preference. In the end, you’re getting loyalty. An e-miles program is designed to help new prospects and build toward loyalty.

You’re not likely to have 200-300 companies you want an e-mail relationship with. But you’ll choose the ones you're really loyal to.

Loyalty programs when they were launched 25 years ago were designed to allow companies to efficiently track passengers on the plane. What’s not understood is how incredibly profitable it is to have and maintain a database. It's an issue of direct marketing. They are very effective at targeting marketing.

SP: Loyalty programs span several different industries. Which ones have been the most effective?

HB: Hotel programs have been more effective than airline programs because they’re built around revenue spent rather than miles flown. You’re creating preference for companies with greater scale, such as Hilton or Marriott.

It’s very difficult for a new airline to start given the power of [competitors'] loyalty programs to defend their travelers. They're also powerful in stimulating incremental travel.

SP: What do you learn about consumers from the e-Miles program?

HB: Video is obviously more powerful at conveying an emotion or a concept than the printed word. We've become very much more video-driven.

With e-Miles, we’re allowing a TV message to be delivered through e-mail, and we can watch how they’re being received by the audience. With 500,000 people watching, I can tell an advertiser that one message was better received by college-educated women in the East, versus Hispanic men in the West.

E-Miles is a market test laboratory, and we’re working with a number of charities. One non-profit we tested two different public service announcements and found that one of the two drove 40 percent more fundraising -- thus allowing the right PSA to be placed into the media.

Most surprising is watching over 80 percent of people opt-in. People are incredibly willing to share their point of view and their information. Their willingness to answer questions is amazing.

SP: How do you measure how much to reward a customer?

HB: Five miles has been proven to be more than enough to watch a 30-second TV commercial or read through a newsletter. They may spend four to five minutes on the site once they get there. We tested 10, 15 points -- it had no effect [on behavior].

TV advertising tends to disrupt the television show. In general, viewers feel that advertising is disruptive. E-miles allows you to choose when. It's a unique level of attention.

What e-Miles is doing is somewhat like a tutorial. If you're interested in knowing what’s happening in the national forest, you may watch the entire thing. Then you'll take a quiz. We did one test for a sleeping pill and ran a 30-second spot. We saw a 25 percent higher awareness among those who saw the spot. Measurable increase in intent to buy.

SP: How do those measurements come into play for the advertisers that use e-Miles?

HB: The advertiser only pays if the prospect that they have targeted watches the entire message and answers the five questions. You're not paying for exposure – you're paying for engagement.

If we put your ad in front of 1 million members, but only 50,000 engage, the advertiser only pays for 50,000.

One smart thing we're doing is that we're partnering with established loyalty programs. We're not paying to acquire our members, we're working with our sponsors. If you're a member of Delta SkyMiles or Continental OnePass, why not spend a little waiting time engaging with advertisers?

Our demographic is 42 years old, 75 percent own a home, $100,000 per year average income, 75 percent college graduates. They’re good consumers -- active consumers.

SP: What's your biggest challenge to date?

HB: Our problem is not getting people to opt-in, it’s getting more advertisers. We need advertisers to realize this is a profitable way to reach consumers. This is a very different approach -- we're not a magazine selling ad pages, we're not search, we're not selling TV ads. We've done very well with having direct marketers in this channel.

We’re one of the early examples of how much better response one can get for offering a bit of a reward for their time. Every advertiser is building a database with prospects. We're an example of how easy it can be. We've become an incentive based economy, where people expect something when they buy something.

Incentive drives incremental behavior, and if the incentive is crafted properly, it does well. We have to admit that we are much more incentive-based today than ever.

There’s nothing wrong for offering an appropriate incentive. It could be as simple as "thank you."

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Andrew Nusca

Editor Emeritus

Andrew Nusca is editor of SmartPlanet and an associate editor for ZDNet. Previously, he worked at Money, Men's Vogue and Popular Mechanics magazines. He holds degrees from the Columbia University Graduate School of Journalism and New York University. He is based in New York but resides in Philadelphia. Follow him on Twitter. Disclosure