Random acts of kindness

Robust databases bring 'surprise and delight' premiums to a whole new level

Eleven years after the phrase was first coined, but only a few weeks after Oprah latched onto it, the notion of ‘random acts of kindness’ spread beyond the Berkeley hippies who invented it and grew into a sprawling network of not-so-random events, clubs and organizations. By 1995 it was a full-blown national movement, crystallized in Random Acts of Kindness Day now celebrated on Feb. 17.

The fact that people like to be surprised came as no surprise to marketers. Many use their own random acts of kindness to gain long-term brand loyalty from fickle customers. Modern database management is helping them do it with maximum effectiveness.

‘Now they’re called ‘surprise and delight’ but in the direct-marketing continuity business, they used to be called ‘stamina premiums,’ which I always thought was a very great phrase,’ says Trish Wheaton, president of Toronto-based Wunderman.

Stamina premiums often meant sending customers a free gift after they’d reached a certain milestone with the company, such as the fourth volume of a Time-Life book series.

‘Out of the blue you would receive a premium, and it might be book ends or something. It always had affinity with the product, but it was also delivered at the point in the consumer life cycle where customers were most vulnerable to defect,’ says Wheaton.

Unexpected giveaways or offers remain a popular marketing tool. Sign up to Club Monaco’s mailing list next time you’re in the store and it’s just a matter of time before a 10% off coupon shows up in the mail. Toronto design boutique Preloved runs a similar program as a means to get people who come into the store to come back. Volkswagen has been known to send a tin of cookies to new owners six months after purchase.

But recently, the advent of customer relationship management (CRM) has revived the practice at a whole new level. Companies who are now keeping an extraordinary amount of data on their customers can not only reward them at key points in the customer life cycle, but also tailor those rewards to the individual.

Grocery Gateway customers in Toronto know all about the phenomenon. Or maybe not. All they really know is that sometimes, unexpectedly, the company surprises them with free gifts.

The company’s marketing policy is to send coupons at customer milestones, such as their 25th or 50th online order. Sometimes the reward comes in the form of electronic coupons, redeemable online at your next grocery purchase. Other times people receive a gift basket full of Grocery Gateway products, tailored to their wants and needs according to past purchases. The key is that the customer doesn’t know what triggers the reward.

‘There are two mind-sets about marketing,’ says director of marketing Scott Robinson. ‘One is fostering an expectation and delivering on it. Then there’s the unexpected customer appreciation tactics. We do both. It’s a bizarre way of saying thanks a lot for your business, and we really value it.’

Until recently, loyal Chapters shoppers might also have been pleasantly surprised after signing up for the company’s membership program. People who purchased the member discount card would regularly – or irregularly, as the case may be – find store coupons turning up in their inboxes. Indigo Books and Music, which now owns the company, is revamping the program in the fall but expects to maintain the element of surprise.

‘The notion of surprising and delighting our customers has been with us since the beginning,’ says Tracy Nesdoly, VP communications in Toronto. Indigo also runs a membership club and rewards and loyalty programs are ‘a very large part’ of the company’s overall marketing strategy and budget.

Loyal members of the company’s iREWARDS program occasionally receive gifts, such as a limited-edition book at Christmas, or maybe something from another category altogether, such as candy, as a way of simultaneously alerting them to other offerings in the store. The cards also offer customers access to members-only events and promotions, like the recent in-store reading by Candice Bushnell, author of the original Sex and the City.

‘We partner with brands or other people where we think there will be a strong fit for our members as book lovers, entertainment-seeking-type people to extend that value-add,’ Nesdoly says. Partners so far include the Art Gallery of Ontario and the National Post.

Diesel Fitness, a classy new gym in the heart of Toronto’s fashion district, has taken the element of surprise and delight to new levels. From day one, the company has focused not just on fitness premiums but on the whole lifestyle of its hip, well-heeled customer base.

‘We’re not just giving away a sports bag,’ says co-owner Joshua Feuer. Instead, gym members get offers such as discounts on restaurants or invites to exclusive parties. Sometimes free product samples from the tony Kiehl’s pharmacy show up in the change rooms.

Random acts of giveaways are an obvious incentive for long-term loyalty. Grocery Gateway routinely gets thank you e-mails from customers pleased with the rewards.

Tom Beakbane, president of Toronto’s Beakbane Marketing and self-described skeptic, isn’t sure.

‘The magic of getting a gift is getting it from someone at an appropriate time that makes you aware that they care about you. If you do it in a database, CRM-type way, it just doesn’t have the magic [it would] if the person knows something about you. The reason the whole thing is such a farce is that it’s mechanized without any sense of the customer’s feelings.

‘If Indigo sends out a gift because it’s your birthday then that’s lovely! Or if you’ve just had a baby and you get a nice little gift from Procter & Gamble. Consumers are very much aware of how much a corporation knows about them, and I’m very happy for a corporation to know about me as long as they show it in the right way,’ he says.

Of course, that’s exactly what companies are aiming for. In January, Shopper’s Drug Mart launched its New Mom program, offering new mothers discounts on products from Nestlé Good Start, Johnson & Johnson baby toiletries and Gerber.

Chris Moloney, director of market strategy and development for Maritz Loyalty Marketing in St. Louis, Mo., has observed a growing number of surprise-and-delight programs in the financial services industry. He notes that surprise-and-delight programs work best for companies that already have a high degree of automation. The more you know about your customer, the easier it is to create behaviour triggers that can result in an unexpected reward.

‘For all companies, whether in the financial, hospitality or service industries, one of their number-one objectives is to create differentiation using something like a loyalty program or service delivery or customer experience. These are competitive differentiations,’ says Moloney.

‘Evidence from our clients show that surprise and delight can be a very effective way to improve retention and satisfaction among high-value customers,’ he says.

A poll conducted this spring by the company found that young people and high-income individuals and households are the most likely to appreciate additional perks and rewards: exactly the high value customers most surprise-and-delight programs are targeting.

The problem is that the ability to measure results is largely built around things like retention rates. That takes patience, and in the present economy, Moloney doesn’t expect many people will be taking any risks. It also means taking money away from programs designed to drive growth rather than retain current customers.

Warren Gencher, president of Ottawa-based Brymark Promotions, sees a different reason to surprise and delight customers. ‘When customers receive free gifts, it creates a debt of gratitude in their minds. That can’t be zapped the way TV and radio promotions are.’