Marketers align to leverage loyalty

In a business environment where gaining a competitive edge is everything, some marketers are forging strategic alliance programs that enable them to make their marketing dollars go a lot farther. ...

In a business environment where gaining a competitive edge is everything, some marketers are forging strategic alliance programs that enable them to make their marketing dollars go a lot farther.

A high-profile case in point is the recent pairing of Coca-Cola and Procter & Gamble, which have come together in a joint venture company to market their respective juice and snack brands. Closer to home, leading marketers such as Dell, Microsoft, Air Canada, Bell Mobility, BMW and Toshiba have coupled to reap the benefits of sharing information, customer databases and marketing costs.

Indeed, databases are the key to most of these types of programs, says Nick King, president of Madison Avenue Communications of Mississauga, who has acted as matchmaker in bringing a number of non-competing marketers with similar target audiences together.

‘We’re capitalizing on the relationship companies have with their customers – and we’re taking that loyalty and transferring it to another company through added-value offers,’ he says. ‘Dell Computer, for example, did a study in the U.S. when they used a strategic alliance with American Express to market their products. With an endorsed offer to the American Express database, response rates were 317% higher than with unsolicited direct mail – that is, renting a business list and then sending a catalog out.

‘With the majority of our programs,’ contends King, ‘there’s a 50-50 co-pay, but in fact the client’s return on investment is doubled because they’re sharing the marketing costs.’

Strategic alliances can take the form of direct mail campaigns or promotions, special offers or contests, with components ranging from in-store and collateral material to mass media and online. They can be used to increase brand awareness, enlarge a customer base, or enhance a product or service offering – particularly when the database used is a ‘members only’ list.

Peter Kerr, director of sales and marketing for Dell Financial Services – the company that handles all leasing and sales financing for Dell Computer – entered into a strategic alliance last December. Dell paired up with Air Canada’s Aeroplan program in an effort to gain some of the holiday business that might otherwise have gone to credit cards used by purchasers to collect on their bonus points

programs.

‘We’ve done a lot of research in the U.S. that shows a good portion of people buy with a credit card for the loyalty points, so the only way to compete was with a similar offer.’

The special offer to Aeroplan members was on Dell’s 48-month purchase plan, a segment of the business the company wanted to grow. The program paid for itself, Kerr says, and furthermore helped Dell build incremental business at a specific time of year.

‘When you find a good fit, these can be very powerful programs,’ he says.

Sue Harper, OEM market-

ing manager for Microsoft Can-ada, was involved with strategic

alliance efforts in her previous

position as director of partnership marketing at Dell Computer. (One of the deals was with Microsoft.)

In the direct marketing arena, she says, once the usual sources of lists are exhausted, partnering with like-minded companies offers access to databases of potential customers which wouldn’t normally be available. In addition, a joint venture eliminates the cost of a list, and splits the onus moving forward.

For their part, the Aeroplan program and Aeroplan Apprec-iation Program – formerly Canadian Airlines’ Canadian Plus – are very active in strategic ventures.

The incentive program works with companies of all sizes to allow them to award travel incentive miles and it partners with a number of other big brands to provide special and exclusive offers to its database of members.

Aeroplan is inundated with partnership requests, says Brian Mullen, manager of corporate incentive programs, Aeroplan. And since ‘you are known by

the company you keep,’ he

says he is careful when selecting relationships.

He considers, for instance, the potential member reward – not only in products and services, but also the size of the mileage rewards members will receive whether through several purchases and a long-term sponsorship relationship or a short-term offer.

‘If a partner has their own database or access to a member list,’ says Mullen, ‘it’s one way to go back to the people they’ve already done business with before. You don’t want to lose the base you already have but you want to grow it as well.