With the first few weeks of the NBA basketball season cancelled and the remainder of the season in jeopardy, franchise owners must wonder if jilted fans will return in the same numbers after the labor dispute is over. Not the Memphis Grizzlies. Named as the “Hottest Team in Sports” in 2011 by ESPN The Magazine, the franchise has gone to great lengths to put into practice one of the four fundamental principles practiced by some of today’s leading marketers: strong customer relationships build long-term loyalty.
(Two of those fundamental principles – create engaging brand experiences and use Web-enabled experiences to cut through the clutter – were addressed in the two previous articles in this series. The fourth principle – customers actually build loyalty to people, not brands, products or services – will be the subject of the series’ concluding article.)
To build strong relationships for the long term, the Grizzlies’ management created a program to reward season-ticket holders based solely on tenure. All season-ticket buyers are given “MVP Status” based on the continuous number of years they have committed to tickets for the entire year. The four levels of status are: Rookie, first-year season-ticket holder; 2 to 4 years; All Star, 5 to 7 years; and Legend, 8+ year season-ticket holder. Benefits vary by status level, but include early entrance to the arena, exclusive ticket window and concession lines, pre-sale ticket priority, on-court photos with the team and many more such perks.
Says Mike Humes, the team’s chief revenue officer, “We really sell the benefit of having that one-to-one connection, building the relationship, the benefits you get in terms of pricing and seat location.”
Building consistently strong loyalty requires a long-term commitment to building such customer relationships. For United Airlines’ Mileage Plus program, loyalty initiatives begin with understanding customer segments through sophisticated customer lifetime value (CLV) analysis.
“We have put a lot of work into the Customer Lifetime Value metric, modeling, and projections and are looking very closely at predictors, drivers, and trends in CLV,” says Tom O’Toole, chief operating officer, Mileage Plus. “I actually think we know how to do it pretty well.”
In addition to thoroughly segmenting and analyzing its customers, United’s Mileage Plus looks beyond the company and the industry in its efforts to understand what drives long-term relationships in rewards programs. Their competitor analysis includes not only other airline programs but also hotel and credit card loyalty programs.
“We look at Delta, American, and other airlines to be sure, but by no means do we confine our competitive metrics to just them,” says O’Toole.
That broad and deep knowledge will be invaluable in the upcoming integration of Continental’s One Pass members, when United Mileage Plus will become the largest airline loyalty program in the world.
Interestingly, Mileage Plus analysis has shown that when members redeem miles for air-travel rewards, their loyalty increases. It appears that the impact of accumulated loyalty rewards on customer relationships may remain somewhat muted until at least some of those rewards have been redeemed.
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