1. Social Loyalty Program
By
Archana Basarur
Digital Marketing MKTG 7546
02/14/2012

2. Table of Contents
Overview. .............................................................................................................................................. 3
Social Loyalty Trend .............................................................................................................................. 4
Case 1. ................................................................................................................................................... 4
Case 2 .................................................................................................................................................... 4
Trend Analysis (Expert opinion) ............................................................................................................ 6
References ............................................................................................................................................ 8
Page 2 of 8

3. Overview:
Facebook’s total user count has increased from 585 million (beginning of 2011) to 800+
million (end of 2011) adding to a total growth of 37% (Marketingland, Infographic). During the
same period, twitter’s registered users have increased from 145 to 200 million, with 50 million
users logging in every day by Sep 2011 (mashable, Infographic). With Tumblr now attracting
over 90 million unique visitors every month, StumbleUpon driving over 50% of all social
network traffic, and YouTube attracting 50% more views than 2010 (Infographics), there is no
denying the influence of social media on the way that we as human beings communicate on a
daily basis. Since the majority of people in the country are constantly on social media sites at all
hours of the day, companies realized that they had a whole new market to reach. In the social
space so many brands are focused on building 'likes', 'mentions' or 'retweets'.
The first traditional loyalty program came into existence 30 years ago, in the form of
AAdvantage by American Airlines, while the first airlines on Twitter joined just 50 months ago:
JetBlue and Delta in May 2007 (Bill, Customerthink, Aug, 2011). Traditional Loyalty programs
and social media platforms both are innovations that were popularly accepted even before they
began to reach their full potential. Now the traditional loyalty programs are hard at work (with
about a 30-year head start), wisely exercising their marketing power–and social media has the
potential to do the same. The rise of customer engagement through social media has brought
into question the “old” concept of customer loyalty. The opt-in nature of social media, where
customers choose when they want to receive and engage in communications with brands, has
begun to overshadow the traditional CRM method of customer loyalty.
Social sites provide an opportunity to recognize and reward customer loyalty not only
for purchases and referrals but also for liking the brand, blogs, writing reviews, spreading the
word like tweeting, commenting on articles etc. The biggest advantage is at reaching millions of
customers at ease and less spending. Hence the scope to tie up loyal customers is enormous.
The big difference here is you are carefully listening to your consumers and rewarding them for
their every simplest action and effort towards brand thus providing them a sense of great
recognition and attention. And guess what – who doesn’t like recognition and rewards?
Page 3 of 8

4. Social Loyalty Trend:
Moving beyond location-based reward schemes such as TopGuest, some companies
have created social loyalty programs that allow members to earn points, redeem points in form
of discounts as they engage in various activities such as commenting on articles, reviewing,
“Liking” or tweeting products, referring friends and participating in polls. This will help
companies to encourage customers’ involvement with their brands more and also at the same
time attract new customers towards loyalty. Two such case studies below:
Case 1: 500friends is Startup Company helping e-retailers leverage the social behavior of
consumers to increase brand loyalty and nurture profitable long term customer relationships.
500friends has white-label LoyaltyPlus technology to reward consumers for social activities.
Consumers get points, badges, place on a leaderboard and special deals for cashing in these
rewards. If a company already has a loyalty program, 500friends can work on top of that
existing program or if it doesn’t it can start from scratch. The rewards and loyalty programs give
customers a reason to come back, rather than just purchase one time at a variety of sites.
500friends gets paid on a subscription basis, based on hitting performance numbers. 500friends
focuses exclusively on big e-retailers and some of its clients include hotels.com,
inkjetsuperstore.com, shoebuy.com etc (500friends.com). They are currently integrated with
facebook and twitter, and onsite reviews implemented using products such as Bazaarvoice or
Power Reviews. They will be integrating with Google+ (once Google opens up an API) and other
sites such as pinterest very soon. They believe in having a comprehensive platform rather than
just point of sale which will help them to further enhance towards relevancy by taking
advantage of increasingly rich customer data collected. Customers will get even more control
over how they interact with brands.
Case 2: PunchTab is the world's first instant social loyalty platform reaching over 1.2 million
consumers every month across hundreds of sites that have integrated the company's loyalty
programs. Using PunchTab publishers, retailers and application vendors can deploy a tightly
integrated reward program to their users in minutes with no development or marketing costs.
Consumers can immediately authenticate through popular social networks and start earning
Page 4 of 8

5. loyalty points that are redeemable for exclusive offers, gift cards, and custom rewards. There
are over 2 million loyalty programs in the United States alone, most of which are trying to move
to an online, social model; PunchTab makes this easy and allows businesses and website
owners to automate the process of bringing hard-won customers back to transact again and
again. (PunchTab.com)
In general any industry where customers make more than one transaction a year is a
good target for a social loyalty program - retail, travel and hospitality, financial services, CPG. In
specific, businesses with customers having lot of online presence is a sure hit. Recent data on
Airline travelers has shown that almost 90% of frequent flyers use Facebook regularly and over
65% “Like” at least one airline on Facebook and there are more airlines on Twitter than there
are airlines with frequent flyer programs (191 v/s 179) (SimpliFlying, Sep 2011). SimpliFlying
Company is helping airlines engage in customer profitability through social loyalty programs. In
late October 2011 by partnering with SimpliFlying, Estonian Air, a fledgling airline from one of
the more exotic parts of Europe, launched the first social loyalty program for its customers. The
new and rather groundbreaking initiative is run via a Facebook app called AirScore and awards
customers points for virtual, but socially important, actions such as tweeting a deal, or writing a
review. These virtual points are redeemable for real-world rewards like lounge access or
discounts on future flights. With this program Estonia is also looking to bring Estonian Air and
Estonia to the world map. Estonia is a small market and in order to provide good connections at
reasonable price for Estonians, the airline needs to also attract connecting traffic from outside
Estonia.
Tasti D-Lite, the great-tasting, lower-calorie frozen dessert chain with a cult following
among health-conscious consumers as well as celebrities, has partnered with start-up SNAP
Services to take customer loyalty rewards to new heights. Patrons earn TastiRewards points by
sharing their experiences with friends and followers online. The company has found that one in
five TastiRewards members are generating connections to at least one social network and 18
percent of those are generating automatic check-ins on foursquare.
Page 5 of 8

6. Trend Analysis (Expert opinion):
According to social loyalty Expert and CTO of 500Friends.com, Bob Tekiela, social loyalty
programs will become the norm overtaking traditional "points for purchases" programs.
According to him, in general any industry where customers make more than one transaction a
year is a good target for a social loyalty program - retail, travel and hospitality, financial
services, CPG. He says “Having a comprehensive platform is a key to success from my
perspective. We see a lot of companies with a point solution. This is fine when companies want
to experiment with new ideas. When however you get serious about a loyalty program, you
want to have a comprehensive view of a customer, encourage a broad set of actions and
support an array of motivators”. Majority of the social loyalty programs currently can integrate
with only certain social sites like Facebook, Twitter; site reviews implemented using products
such as Bazaarvoice or Power Reviews etc. They are also planning to integrate with Google+
(once Google opens up an API) and other sites such as pinterest. Going forward, programs will
be further enhanced and made more relevant by taking advantage of increasingly rich customer
data collected and available. Customers will get event more control over how they interact with
brands.
According to industry experts, the key differentiator will be rewarding customers for a
wide range of actions which encourage both "spenders" and "talkers". The future of this trend
is to drive the total value of customer defined as Total value = Lifetime Value + Referral Value.
Different people respond better to different motivators. One of the competitive strategies will
be to support both traditional financial motivators and social motivators such as badges,
leaderboards and public mentions to make social loyalty programs appealing to a broader set of
customers. Making it incredibly easy to launch and customize a loyalty program according to
brand needs is equally important. It will not be a surprise if future social loyalty programs start
providing tools to show the impact of the loyalty program on sales, brand popularity, increased
customer base etc.
“Marketing to small businesses is similar to marketing to consumers. Similar tools and
techniques can be used” says Tekiela. The next step in the trend will be attracting businesses
which have small businesses as their customer to leverage social loyalty. At the other extreme
Page 6 of 8

7. you would have for example an aircraft engine business of GE which essentially has two key
customers - Boeing and Airbus. In such business it is all about human touch. In the middle you
have B2B companies which sell to enterprises. They can of course leverage social media to build
loyalty. The focus would however be different - size of customer base is smaller but depth of
interaction higher. Brand specific community sites attached to company websites work well in
such scenario.
There are some concerns about user privacy involved with social loyalty which demands
user to enter social media credentials to enroll to such social rewards programs. Another
challenge would be integrating the social loyalty program to larger group of social media
platforms to attract and reward broader customer interest base.
Page 7 of 8

8. References:
1. http://marketingland.com/infographic-how-facebook-grew-users-pages-in-2011-3943
2. http://mashable.com/2011/09/30/twitter-history-infographic/
3. http://estonian-air.com/en/service/news/press-releases/estonian-air-makes-history-in-loyalty-
marketing/
4. http://mashable.com/2011/02/09/snap/
5. http://www.bizreport.com/2011/06/why-social-loyalty-is-as-important-as-social-strategy.html
6. http://www.customerloyalty.org/how-social-media-is-changing-customer-loyalty-programs/
7. http://www.forbes.com/sites/tomiogeron/2011/06/21/500friends-helps-ecommerce-
companies-build-loyalty/
8. http://www.customerthink.com/blog/the_historical_bond_of_social_media_and_loyalty_progr
ams
9. http://www.punchtab.com/
10. http://500friends.com/
11. http://simpliflying.com/2011/infographic-the-future-of-loyalty-program-will-be-powered-by-
social-media/
12. http://www.loyalty360.org/state_of_the_industry/the-future-of-loyalty-programs-is-social/
13. http://www.prnewswire.com/news-releases/punchtab-raises-850000-in-seed-funding-to-build-
instant-loyalty-122930238.html
14. Bob Tekiela, Co-founder & Chief Technology Officer of 500Friends - Prior to joining 500friends,
Bob served as CTO of StrongMail, a Sequoia-funded company and leader in e-mail marketing
software. Previously, he was CTO of social media innovator PopularMedia, Vice President of
Technology at Sapient Corporation, and CTO at Digitas. Bob holds an M.S. from AGH University
of Science and Technology in Krakow, Poland.
15. http://www.entrepreneur.com/article/222444
16. http://www.bizjournals.com/sanjose/news/2011/11/08/punchtab-raises-44m-led-by-mdv.html
17. http://www.businesswire.com/news/home/20120119005301/en/Bamboo-Social-Rewards-
Platform-Propels-Estonian-Air
18. http://travel.usatoday.com/hotels/post/2011/11/social-media-not-so-effective-for-customers-
hotels/569640/1
19. http://www.prnewswire.com/news-releases/turnto-networks-and-500friends-form-strategic-
partnership-to-boost-brand-loyalty-and-revenue-for-e-commerce-retailers-138987884.html
20. http://socialcommercetoday.com/speed-summary-putting-social-media-to-work-bain-report-
download/
Page 8 of 8