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Ideas, Information, Inspiration (Winter 2010)

Legal Issues

Investigation Examines Membership Marketing Practices

The New York State Attorney General’s office recently added its weight to efforts by a U.S. Senate Commerce Committee to clean up “membership club” marketing practices.

Specifically, the investigation involves a number of retailers and marketing companies, including Webloyalty, Affinion Loyalty and Vertue, that have made use of online ads on retailer websites to offer discounts or cash-back coupons from other vendors to consumers in return for an email address or user name. However, the fine print in such offers notes that by accepting the coupons, the consumer is actually signing up for a membership program and authorizing credit card charges that can run as high as $20 per month. At issue is the fact that consumers aren’t actually entering their credit card information. That information is being bought from retailers and other online merchants.

New York State Attorney General Andrew Cuomo notes that the online scheme has impacted the finances and tried the patience of tens of millions of consumers nationwide. “Well known companies are tricking customers into accepting offers from third-party vendors, which then siphon money from customers’ accounts,” he says.

ost of the companies involved say they have abandoned the practice or will soon do so. For example, Kimberly A. Kortash, a spokesperson for Affinion Loyalty, says, “While our marketing has always incorporated clear, prominent and unambiguous terms, we are constantly evaluating our offers to consumers. Prior to any engagement by the New York Attorney General’s office, we updated our practices to require consumers to provide all 16 digits of their credit or debit card number when enrolling online in our membership clubs and programs.”


Mercer: Engagement a Top 5 Issue in 2010

Mercer’s Human Capital consulting practice recently identified the top five issues for organizations to focus on in 2010, one of which is “Mitigate turnover risk and restore employee engagement.” Ken Gilbert, head of Human Capital at Mercer, says “2010 will be driven by a new employment cycle: organizations will be looking for ways to successfully rebuild and revitalize their workforces. However, getting it right will require consideration of the factors that have impacted workforces during the global financial crisis and its aftermath.” In discussing turnover and engagement specifically, Gilbert says that the skills shortage is far from over, and an increasing demand for top talent will hit much quicker than people realize. Re-engaging demoralized employees who remain in the organization will be critical for restoring faith before better opportunities surface. For employers, open communication and strong leadership will be more important than ever, as business picks up and employees review their options. With morale lower and employee uncertainty about the future potentially high, the need for effective employee engagement will be great. Managing the “change journey” – the organization’s changed environment – will be critical to success. Gilbert adds that there’s no one-size-fits-all change framework, but offers these tips to help companies develop the capability to manage change:

  • Cement a view of where the organization is and where it needs to be
  • Pay attention to both the “organization journey” and the “employee journey” – not just “what’s in it for the business,” but also “what’s in it for employees?” 
  • Use change levers to effect “people change” alongside “business/technical change.” – for example, training, incentives, role design and leadership programs.

• To view the complete report, click here.

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‘Engagement is Not a Fad…’

Engagement is not a fad; it’s the way today’s consumers do business. Marketers will come to accept that there are four engagement methods: The platform (TV; online), the context (program; webpage), the message (ad or communication) and the experience (store/event). At the same time, they also will realize that brand engagement will become impossible using out-dated attitudinal models.

Dr. Robert Passikoff, President, Brand Keys, Inc., from ‘10 Branding Trends: Value is the New Black,’ an article in MarketingVOX: The Voice of Online Marketing

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IRF Releases Industry Trend Data

A recent Pulse survey by the Incentive Research Foundation reveals several indications of (slightly) rosier times ahead. While the industry is not quite ready to breathe a sigh of relief, these results indicate a brightening outlook as practitioners plan programs for 2010. Highlights from the study include:

  • 44% of respondents anticipate no change with regards to incentive travel program destinations in 2010, while 47% anticipate a switch from international to domestic destinations.
  • 32% of respondents say that budgets for merchandise/non-cash incentive programs in 2010 will increase (either moderately or slightly), while 34% anticipate that budgets will remain unchanged.
  • When asked “What changes, if any, will be made in 2010 with award selections?” 27% of respondents say they will include individual travel as an option in 2010; 22% indicate that the use of debit/gift cards will be increased; and 18% will add merchandise. It should be noted that 30% indicate there will be a decrease in merchandise award value for 2010 programs.

• For more information about the IRF’s Incentive Industry Trends 2010 study, go to: www.theirf.org

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Towers Watson Study on ‘Turbocharging’ Engagement

Towers Watson’s global research on the factors that increase employee engagement has shown that high engagement results from an array of organizational elements, but two have a particularly strong influence:

  • Senior management’s sincere interest in employee well-being
  • The opportunity an employee has for personal development of skills and abilities

In a recent report entitled Turbocharging Employee Engagement, researchers examine the three main drivers of recognition by managers – inclusiveness, communication and trust.  Each factor has important aspects that can power up or power down the effect of recognition on employee engagement. This “virtuous circle” represents one of management’s most potent tools for focusing employees on what matters to the enterprise and reinforcing the behaviors that contribute most directly to strategic success. The most powerful car doesn’t always cross the finish line first, of course. Driver skill enters the picture as well, as do road conditions and a certain amount of luck. Likewise, employee engagement isn’t enough, by itself, to create and maintain a marketplace lead. But, all other things being equal, the organization with turbocharged employee engagement puts itself in a strong position to win the race.

• To download a copy of the full report, click here.

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Mergers & Acquisitions

Maritz Buys AEIS

Maritz Holdings, Inc. has bought American Express Company’s minority interest in American Express Incentive Services (AEIS.) As a result, AEIS is now entirely owned by Maritz Holdings and its affiliates, and Maritz executive Mike Donnelly has been named Chief Operating Officer of AEIS. Terms of the agreement were disclosed at press time. Following this transaction, AEIS will continue to operate as an independent entity but will change its corporate name and re-brand itself before the end of 2010. For the past 13 years, AEIS has been operated as a joint venture between Maritz Holdings and a subsidiary of American Express. “AEIS operations will remain mostly as they do today – our clients and cardholders can expect business as usual,” says Darryl Hutson, AEIS CEO. John McArthur, Senior Executive Vice President of Development for Maritz, notes that “The prepaid card space is a growing market, and an excellent opportunity for Maritz and AEIS to grow our business together. We’re looking forward to exploring and developing a wide array of new solutions for our clients.” 

• For more information, go to www.maritz.com

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IRF Invitational to Be Held at the Broadmoor in Colorado Springs

The Incentive Research Foundation (IRF) has announced that its 17th annual Incentive Invitational will be held in Colorado Springs, CO at The Broadmoor Resort, May 19-23. In addition to The Broadmoor, co-hosts for the 2010 Incentive Invitational include the Cheyenne Mountain Resort, Destination Colorado and partners, Vail Valley and partners, Destination Services of Colorado, Rocky Mountain Adventures, Experience Colorado Springs Convention & Visitors Bureau, and other Colorado area hosts. The Incentive Research Foundation funds and promotes independent research to advance the science and enhance the awareness and appropriate application of motivation and incentives in business and industry globally.

• For more information, and to download IRF research, go to www.TheIRF.org

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Industry Insider

Rymax Marketing Services, Inc. recently announced an exclusive partnership with eZeebike USA, Inc., the exclusive distributor of eZee electric bikes in the United States, and is now offering their products within the incentive industry on an exclusive basis. The company’s lineup consists of several electric models, including beach cruisers, performance bikes, tricycles, and a compact foldable model that can easily fit in the trunk of a car….Maritz Real-Time Rewards and Affinity Solutions have joined forces to offer a comprehensive point-of-purchase relationship marketing program for U.S. credit and debit card issuers and retailers. This joint effort will enable both retailers and card issuers to conduct customer segmentation and in-depth analytics for the retail back office, while engaging consumers in real time at the point of sale, whether in store, online, via mobile device or any other payment channel. For more information, go to: www.maritzrtr.com or www.affinitysolutions.com....With the release of the 2010 Certif-A-Gift catalog, the company’s new focus on green brands lets eco-minded recipients choose from a variety of earth-friendly products, including SPRIG earth-friendly toys, Pure by Chantal ceramic stoneware, Eton self-powered radios, Go-Ped electric scooters, iTouchless recycling bins, Solio solar chargers, Remington electric lawn mowers, Rachael Ray bamboo accessories, Diane Katzman recycled jewelry, eco-friendly totes from Good Hope Bags and Charles River organic cotton canvas jackets.

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Winter 2010

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