Paul Laherty’s LinkedIn Tip Sheet

Linkedin is the primary tool recruiters, fans, employers, colleagues, customers and friends use to learn about you. It’s a powerful application and an open-book. You don’t have to reinvent the wheel – review what other people in your profession have done and use their profiles as a benchmark to measure your story. You should even ‘borrow’ ideas that represent you from anyone who says it better than you think you could.

This isn’t everything but it will give you a good start. Even a brief profile can be effective and allow you to generate thousands of relevant connections.

Linkedin is one-part of a complete brand-building strategy. You’ll learn a lot by becoming an expert user so it’s worth focusing on it as a starting point.

1. Getting started – You need a starting point to measure your progress so create a network map of your connections before you make other updates and changes. Visit Socilab.com to create a report about your network. It’s even better than inmaps, as long as you have fewer than 500 connections, since it shows your network ‘developing.’ Capture a screenshot to use later (save it as a pdf, jpeg, or other photo file – most computers have “Paint”, just “Paste” the screenshot into it, and “save as”).

2. “Turn off notifications” as a courtesy to your connections (since you’re about to get busy). From your thumbnail photo select “Privacy & Settings”, then, in the lower-center choose “turn on/off your activity broadcasts.”

3. Select groups to join and companies to follow. You should choose associations and groups you have in common with your co-workers, colleagues, friends, family, and classmates. Once you’ve joined a group, you can manage visibility – many groups should be public on your profile, but “connection generators” should be hidden. Consider turning off notification messages from the groups you join, but you should allow members to contact you.

4. Join the following groups (you can join 50):

A. Ten trade associations in your profession.
B. Your school alumni associations.
C. Military and veteran groups.
D. TED: Ideas worth spreading (400K+ members).
E. Another 20 that are specific and important to you. E – J (below) should be hidden from view (you can select this option in ‘Manage Groups’
F. Jobs (+750K members)
G. Linkedin:HR
H. Linkedin Residential Real Estate
I. Linkedin Accounting
J. Linkedin Entertainment
K. eMarketing Association Network.

5. Follow companies and organization (not included in the 50 “groups” you can join):

A. Your employer
B. Previous employers
C. Competitors
D. Your suppliers
E. Local colleges/universities
F. Local companies

6. Follow influential people and trend setters:

A. Elon Musk
B. Mark Cuban
C. Tony Robbins
D. Seth Godin
E. Nassim Taleb
F. James Rickards
G. Influential people in your industry

7. Add 10 skills: Leadership, Management, Strategy, Venture Capital, Startups, Procurement, Product Development, Marketing Communications. Keep this list small so you can hit 99+ endorsements for each one as soon as possible. Once you have many endorsements for those, then add new skills.

You’re on your way with a more complete profile.

8. Add connections.
Do not send blast emails. Personalize connection requests – it doesn’t need to be sophisticated, but you should show recipients that you care enough to personalize the note. Here’s an easy example. John – I hope you’re doing well. I’d like to add you to my network on linkedin. Regards, Dianne. Short, easy, personal.

Tips: This fact is a goldmine: you don’t need to know someone’s email address if you are connected to them through a group.

Another nugget for your consideration: Linkedin prevents spamming through sophisticated algorithms that keep track of how many invitations you send out, how quickly people respond, and the percent that accept your requests. This is why personalization is crucial. You want quick ‘yeses’ to keep going. This means your friends’ parents, or kid’s soccer coach plays a role – they’re likely to say yes, so when your CEO sits on hers for a few days you don’t get locked out.

Find people who are well connected – they will give you exponential reach. It’s better to have ten connections that each have 5,000+ connections, than a thousand people who have 10 connections.

Look for LIONs – Linkedin Open Networkers (they have a circle logo next to their profile). These are people who encourage others to connect with them. Authors, speakers, consultants and senior executives are more open to connecting if you send them a good argument. As your work advances It’s a great idea to search for people who are similar to you or have the same title. In the search box type “Product Development” or “Sales Manager” to find the highest ranked people. Look at their profile. What groups do they belong to that you could add? How did they write their job descriptions? What skills have they listed?

Now – do the same thing for the current and former trade association Presidents and Board Members… how can you incorporate information from their profiles into yours?

Search Engine Optimization – This is a book by itself. To get started, select five words or phrases you think describe you or the roles you’ve had and are looking for. For this example use “Software Developer” – next, use http://www.google.com/trends to search for your term. You’ll find that it’s not a great search term, but a similar term is, “Software Engineer.” So if you decide to stick with “Software Developer” you should also seed your profile with “Software Engineer” to maximize the number of times you will appear in Linkedin Searches for one of those terms. It doesn’t matter what your key words or phrases are, what matters is what other people think and how often recruiters use those terms, so embrace “Google Trends” and use it to guide you towards relevant, high-frequency key-words to give you the best advantage.

Have fun and share what you learn.

Coaching

Optimize your linkedin profile

So it’s time to refresh your profile… where to begin?  Said another way, where do you get the most bang for the buck on your profile? The answer depends on your goals, but generally, it’s useful to acknowledge that your linkedin profile is “content”, while Linkedin is a content “host” and “data-aggregator” that powers search results with a proprietary algorithm hidden from the user’s view. So how do we measure something that’s invisible? Easy, identify the search terms you expect people to use to locate your profile.

Here’s how you do it. Open the “Advanced” search window in Linkedin. Put four or five of your keywords or phrases in the “Keywords” field (separated by commas). Then move down to the “Postal Code” field and type in your code; next, select a distance in the “Within” field. Then hit “Search” to see the results sorted by relevance. Record your position and note the page your profile shows up on. Then expand the distance by changing the “Within” field and repeat until your profile doesn’t appear in the results. Now hit “reset”, a link next to the “Search” button. Re-type your keyword list to perform a worldwide search.

At this point you should examine profiles that appear at the top of the search results on the first page, since these profiles have the highest relevance score in Linkedin’s algorithm. Pay close attention to variations of your keywords that appear in multiple high-scoring profiles. Once you’ve created a list of phrases and keywords the top performers used edit your profile to include two of the new keywords or phrases in several relevant places throughout your profile to test their effect on your ranking. Rerun the search with the distance filter to measure your profile’s performance against peers near you compared to your starting point.

Your keyword strategy starts with description words about your job-level, functional area, and industry: Hotel Sales Manager, Software Developer, Hospital Administrator, Author, Speaker, Product Strategy Manager, Inbound Marketing Director. You know what they are, but what you don’t know is which words and phrases are favored by the recruiters, customers, and partners who might be looking for your profile. Fortunately there’s a multi-million dollar tool freely available to you to uncover insights about how most people search for the terms you think best describe you. Google trends.

Go to google.com/trends and type your first keyword in the search box. When the results appear they will include “Related Searches” below the fold. Scroll down to look for similar keywords that might outscore the one’s you’ve selected. Compare the new keywords and phrases to the list you captured from high scoring profiles? Use google.com/trends to evaluate the new phrases too – and update your list powered by this new information.

On to your profile – great profiles have a lot in common. They include high quality profile photos – and no photo is complete without enhancements in photoshop. It’s a photo…a representation of you…it’s not you… so you should have perfect hair, and gleaming white teeth… and you should not have a beer in your hand, an arm around your shoulder, red-eye, or any variety of crazy accessories. Don’t use any picture that could be included in a “caption contest.”

Do ensure that your profile is 100% complete – Linkedin leads you through steps required to get there.

Do put your contact details at the top of your profile, and in the section marked “contact details.”  Make it incredibly easy for people to reach you.

Do put schools, organizations, affiliations, and hobbies in your profile.

Do join at least ten groups in your industry, and another ten groups in your functional area, and five or more groups for your level. Along with alumni associations, athletics, and religious organizations above, groups will increase the number of items you have in common with other people. It will humanize and personalize your profile. These touches will increase your likability, accessibility, and approachability, all characteristics that will enhance the probability that others will reach out to you proactively.

All of this can be achieved without more than a sentence or two about each position or job. Leave the detailed scope and accomplishments light and focus on keywords and your profile completion score, then fill-in the remaining areas when you have more time.

In his book, Bounce, Matthew Syed pointed out that expertise requires “Meaningful Practice” – I agree, and this article should help you get there with Linkedin.

Coaching

How to Conduct a Salary Negotiation

Salary negotiations are something most people think about related to executives. Not true. They go hand in hand with “will” and “will not.” The important list everyone has about what they’re willing or unwilling to do in any job.

During my “Career Transition” course, I’ve met people who are surprised when I show them how to negotiate for a new position with their current employer. Negotiation covers more than your salary – time off, flexible work hours, flexible work days, your cube location or anything else that matters to you and the time to bring it up is right after you’ve been offered a job.

Your “Will / Will Not” list is important – it’s critical – but the time to refer to your list is after you’ve been made an offer. Here’s why. By the time an organization has completed the steps to identify their top candidate for a role, they’ve already imagined what life will be like with you on their team. Even if the job required a candidate to move. They think you’re amazing – that’s why they’re willing to hire you. So if you really are amazing, wouldn’t they rather let their new “amazing” employee work from home in Dallas, than an office in Charlotte? Maybe, but you’ll never know if you tell the recruiter on day-one that you’re not willing to move. Once you have the offer in-hand you have something that didn’t exist when you were a candidate – now you’re the selectee and selectees have leverage because hiring managers and recruiters don’t want to be wrong. They picked you because you’re the best.

On to the negotiation. Never accept an offer before you have seen all the details in writing. Thank the recruiter or your new boss for their call and say politely, “Thank you for your offer – I’m delighted, and I’m looking forward to reviewing the details in your written offer.” Review the offer once it’s received – most companies will send it via Fedex, so they know when you’ve received it. They’re ready to move forward so you may get a call asking when they’ll receive a signed acceptance letter. That’s when you kick off the negotiation. Here are the steps:

  • Thank them for the offer and their work and effort to get it to you.
  • Tell them you have a few concerns and would like to address them.
  • Ask the caller if he/she has the power to negotiate with you about the offer?
  • If they can negotiate, point out that you will accept their offer if they can make a good faith effort to resolve your concerns.
  • Share your concerns (you want a window office, salary too low, bonus structure insufficient, you can’t pull the kids out of school until May, etc…).
  • Stay positive and keep it light, and give them a chance to respond.

Live the life you want not the one others try to give you.

Coaching

Great Answers to Tough Questions About Your Salary During a Job Search

Salary conversations are one of the most difficult steps in any career transition. You don’t want to leave money on the table or be under-paid relative to your peers, but too often it’s a lop-sided conversation – the HR manager has much more information than you do – and the imbalance is getting worse. Armed with information about the recruiter’s point of view and their resources can help.

At some point during your job search a recruiter will ask you an uncomfortable salary question – when they surface late in the process you may be ready to answer, but when a salary question arrives early, and unexpectedly, it creates stress and uncertainty.

Salary bombs come in many shapes and sizes, but often sound like this,

  • “How much do you make?”
  • “How much did you make in your last job?”
  • “What are your salary requirements?”
  • “How much do you expect to earn?”

Recruiters will ask because they want to increase their success rates. There are two issues – the first is your salary and benefit expectations for the current role; the second, and less important, is your salary history. Most people assume previous salaries will be used to negotiate a lower offer. That may be the case with unprofessional or inexperienced recruiters, but you should assume you’re negotiating with a professional, and tap into their competitive drive to find a great candidate in their price range. There’s no point to pursue a candidate who would never accept a low offer, so the question about salary requirements is an easy way to vet the candidate pool, improve the recruiter’s success rate, and reduce workload. When it comes to questions about your salary history the problem is your previous role and responsibilities may have little correlation to the job you’re interviewing for now, and your current salary is irrelevant.

Your response matters; mishandle this and you’re no longer a candidate. Handle it well, and you could be on your way to an offer for your next great opportunity.

Rehearsing your response will give you an edge. Try turning it around on the person who asked:

  • “Rather than answer your question I have one of my own. How much have you budgeted for the position?”
  • “In my previous role, I managed a ten-member team, and this position has eight direct reports and thirty people – it’s very different than my current job.”
  • “How much do you think it’s worth?”

In another approach you could point out that given your skill-set, the job description may expand substantially by the time you’re finished with the interview process. If the recruiter can confirm that the company’s salary and benefits are competitive in their industry for that location, then you’re confident you can work something out once the details are known. This shelves the conversation and lets you pass through their “screen” to move forward in the process.

Sometimes nothing works, they hold their ground and don’t allow you to deflect. When a recruiter insists you provide an answer about your current or previous salaries, as long as you asked them to clarify how the information will be used, you can be confident that you’ve done everything you could to help yourself. It’s time to provide factual details. Don’t offer a compensation number, then add medical, 401K, bonus, and other perks, to give them an inflated value…like $200K when your base compensation is $130K. Recruiters have access to a powerful tool – the Equifax Verification Service, theworknumber.com, a subscription service that many companies use to verify employment history and salary information. You can’t lie about your salary and get away with it. You should tap into a source of power for job seekers – Glassdoor.com. Although salary ranges published on Glassdoor are self-reported, it could be very helpful to ask your recruiter to explain the numbers and ranges for similar positions found there about the company you are interviewing with now.

Whatever you do, once you’ve given them an answer don’t negotiate against yourself – only negotiate once a formal offer has been delivered.

Human Resource professionals want to be successful partners to the companies and organizations they support – stay focused on your value and let them be your champion to explain why you’re worth more than everyone else.

Coaching Featured

Armored Attitude

Attitude is the most important ingredient for your survival and security. Survivors share a realistic belief about their capabilities and likely outcomes. Survivors have an “Armored Attitude.” Don’t confuse this with unbridled optimism from pom-pom waving cheerleaders. An Armored Attitude is a rare approach to adversity, but it’s extremely effective.

Awareness is another powerful ingredient. Awareness is the preparation and the dynamic evaluations people make as they move through space – often called situational awareness. Awareness isn’t sufficient to find a solution in high risk situations or events. Awareness is a starting point. High awareness gives you an edge and allows you to consider alternatives as risk increases, meanwhile attitude is the motivation layer that guides you to safety.

Survivors thrive because they understand that 9-1-1 is never immediate – it’s only a back-up. Survivors with an Armored Attitude understand that Police and Fire Fighters are Second Responders. You must be your own First Responder. Remember the Cheerleaders – they’re the one’s who let their guard down when the Cavalry shows up. Survivors don’t stop fighting while there are still choices to make.

In Tim Larkin’s, How to Survive the Most Critical 5 Seconds of your Life, he offers a thought experiment that asks how you would feel if a muscle-bound 300 pound man was paid to harm you? Tim doesn’t ask if you could defeat this opponent, only if you could “touch” him. It’s easy to imagine that you could put your hands on this guy, but harder for most people to envision walking away from the encounter. Tim teaches you how. It’s that attitude that gives you an edge. His program, TargetFocusTraining, teaches exceptional skills to average people and can help you develop an Armored Attitude.

Another great resource to help you develop an armored attitude comes from Tim Schmidt, the founder of U.S. Concealed Carry. Tim is an expert who knows how important attitude is. He has been a strong advocate for Lieutenant Colonel (Retired) Dave Grossman’s “Bulletproof Mind.” Dave’s program educates people about personal defense techniques and ideas. Between the two of them, you’ll get a terrific education in the power of attitude.

Case studies demonstrate how planning can build an environment to create winners with an Armored Attitude. Southlake, Texas, a city with 35,000 residents has an incredible record in High School football. Southlake Carroll High School has won the Texas state 5A football title five times in the past ten years and three former Dragon’s suited up for the 2011 Superbowl. In the late ’90’s the Dragons outgrew their existing facility, but rather than divide their students between two High Schools, Carroll ISD kept 9th and 10th Graders together in the original building, while 11th and 12th grade students moved to a new “Senior” High School. From kindergarten to graduation students in the Carroll School District are Dragons – a unified mascot across Southlake established an enormous fan base. Dragon’s symbolize the entire city, not just their football team, and residents have high standards and higher expectations.

Another example may answer the question – Why are Marines so tough?  Organizational marketing drives their confidence and attitudes. Marines benefit from the same ingredients that make Southlake Carroll so tough. Individually Marines are evenly matched against US Army Infantry soldiers, but Marines have a different belief system. Every Marine is a Rifleman first, and that expectation is drilled into them from their first day. Marines are indoctrinated to feel like they’re part of an exclusive, neglected, and scrappy organization that can’t depend on anyone else for survival, and their mission profiles and history provide ample evidence to support those attitudes. Meanwhile, the Army lowers expectations and motivation by dividing its forces into three broad groups: Combat Arms (Infantry, Armor, Artillery, Cavalry, Engineers), Combat Support (Chemical, Military Police, Military Intelligence, Signal), and finally, Service Support (Medical Service, Quartermaster, Logistics, etc.). Expectations are stratified by design. Many Support soldiers believe they will not be needed to perform combat operations – “we won’t need to use our weapons” is a common attitude in the support ranks and contributes to lower motivation and performance in combat skills. Unarmed civilian contractors hired to perform many duties carried out by support units contribute to that belief system by serving as an existence proof that those thoughts are accurate. Army Warfighters are professional high achievers, but on balance, it probably takes fewer Marines to put more rounds on a target.

Violent weather, mechanical failures, bad luck, criminal mischief, and civil unrest swallow targets everyday on any part of the globe. No matter where a threat comes from or what form it may take, an Armored Attitude combined with good situational awareness will give you an edge that may be the difference between an interview with you than an interview about you.

Coaching Risk Management

Celebrating “Gus” Kaminski on Veterans’ Day

Robert Andrew “Gus” Kaminski, US Navy SEAL, and Commander of the US NAVY Leapfrogs.

I knew Gus and many of you saw him in action – an anonymous actor who jumped into a stadium or super-speedway to launch a great event. I was very sorry to hear that he passed away.

Gus was Alpha-500, my battle-buddy at Airborne school. We met in September, 1995, right before I moved to Korea. I was Alpha-501, the second senior student by date of rank. Gus had graduated from the Naval Academy the year before and had just finished his SEAL training. He needed to complete the Army’s basic airborne course before assignment to his first operational team.

Gus was a character – and he knew it. He had a highly developed sense of humor and perfect timing. Gus was also a physical specimen. He could do fifty consecutive one-armed pull-ups. This brought a lot of pain for me. Gus would mouth off to the Blackhats (Airborne Instructors) regularly so the rest of us spent a lot of time in the front-leaning-rest to pay for his sins. I remember vividly that my face hurt from laughing more than my arms did.

He led the way, but wasn’t the only one who would rib our instructors. Anytime Gus would take a break, Second Lieutenant Pendergast, from the Oregon National Guard, Alpha-503, and a recent Ranger school graduate, would shout, “I’d rather be a Leg-Ranger than a Tabless Airborne!” This insulted our Blackhats who would tear into a rage every time Pendergast said it.

We were bruised, tired, and happy in the 100 degree heat – Hurricane Opel had just trashed Fort Benning and we were covered in Georgia sand, pine needles, tics, sweat, dust, and god knows what else. Gus wasn’t even winded when he started yelling – “You can’t smoke a rock”. That got ‘em fired up again – I was between the two of them trying to get air between laughing and doing pushups. Now it’s my turn so the Blackhats are yelling at me (for laughing). Apparently I wasn’t taking my Airborne training seriously, that’s when Gus changed his tune again to “You can’t smoke a quitter.”

I was living through a moment I knew I would remember forever. Unbelievably I followed him out the door on his first jump. Kaminski is still the toughest guy I’ve ever known and one of the happiest. Although we never spoke again I enjoyed knowing him – and I’m confident there’s an entire country that will miss Gus. You can learn more here.

Aviation Coaching

Loyalty Programs that Work

Background

Contemporary loyalty programs generate power by transforming dreams into action. The Marina Bay Sands hotel pictured above epitomizes the aspirational destinations customers enjoy through participation in a travel loyalty program. Great loyalty programs inspire customers to choose the host company even when less expensive alternatives exist. So when the search for profitable customers drives you to create a loyalty program, here is how to do it right.

There isn’t a single recipe, but certain ingredients are known to taste better and every compromise you make to the set of principles outlined here will reduce the number of people you can influence. When applied carefully these principles will improve customer engagement and lead to higher profits and lower costs. Exceptional loyalty programs offer meaningful value. That value is accrued seamlessly without obstacles. Great programs are transparent and customers understand them intuitively; they eliminate friction at every turn.

Loyalty is measured by the number of customers you inspire to select you over and over again. Loyal customers spend more than average customers, they do it more frequently, and they’re more likely to stick with you after a bad experience. Your Customer Relationship Management team has segmented your customers thoroughly and you know how much your best customers are worth, and numerous white-papers and empirical research conclude loyal customers are responsible for a disproportionate share of business profits. But how do you inspire customers to remain loyal? More importantly, how do you convert ‘good’ customers to behave more like your most profitable, loyal disciples?

To answer those questions and for a thorough understanding of the loyalty space its worth exploring consumer and business loyalty programs including American Airlines’ AAdvantage program, Delta’s Skymiles, the Citibank AAdvantage credit card, Capital One cards, Starwood Preferred Guest for Business, Starbucks Rewards, and a host of business-to-business programs designed to engineer loyalty or drive customer retention. I’ll focus on travel industry programs and a few non-travel schemes.

History

Loyalty programs have spread to include everything from hotels, rental cars, sandwiches, haircuts, oil changes, and home mortgages. Many of the largest programs allow customers to transact with partners on both sides – earn and burn. Before Capital One credit cards, AAdvantage Miles and AMEX Rewards Points, companies rewarded consumers with “green stamps” from Sperry and Hutchinson (S&H). Greenstamps were literally stamps awarded to customers at the point of sale for a variety of behaviors. They started in 1896 and continued through the mid 1980’s. Retailers, supermarkets and other retailers purchased “Greenstamps” from S&H to issue to their customers and once the customer accumulated enough stamps they would redeem them for products from an S&H catalog. At their peak in the 1960’s S&H’s reward catalogs were the most widely distributed publication in the United States, while they issued more than three times as many stamps as the US Postal Service.

SH-green-stamps

By 1978 competition following deregulation of the airline industry and the widespread use of more powerful computers supported expansions in airlines’ sales and marketing programs. In 1981 American Airlines launched the AAdvantage frequent flyer program (followed closely by United Airlines) and a few years later added a co-branded credit card product with Citibank. The frequent flyer program gave people a chance to accumulate credits quickly, while the Citibank AAdvantage card offered another way for less well-traveled consumers to enjoy the benefits of cheap flights. Throughout its history, American’s AAdvantage program had the highest enrollment and member participation rates among frequent flyer programs and loyalty credit cards. Over the past decade American’s partners have purchased more than $1 billion annually to distribute across 50 million members making AAdvantage one of the most influential contemporary consumer loyalty programs. Mergers have driven Delta’s Skymiles and United’s Mileage Plus programs ahead recently, while global alliances including Oneworld, Skyteam and the Star Alliance expand program reach to customers who may never step foot on a US or European owned aircraft.

Airlines operate ‘anchor’ programs that drive scale and reach that few retailers can match (McDonald’s and Starbucks are notable exceptions). The most successful travel programs have powerful, exclusive relationships with consumer banks. Those banking relationships are driving the next wave of business-to-business loyalty programs and the future looks bright.

Value Proposition

Loyalty programs must be meaningful – the accrued value must be worth managing. Customers must be able to calculate value intuitively. Earning behavior must be easy to describe, easily understood, and programs should give credit for wide-ranging transactions, not just a narrow band of profitable behavior. This is distilled to Simple, Seamless, and Comprehensive.

Global Airlines run the largest programs and typically offer a free domestic coach ticket for 25,000 flown miles. An average round trip is 2,500 miles, so travelers generate 10% of the award value from each trip. That’s a good value trade-off. Travelers who also spend $25,000 on an airline credit card have an easy way to earn two award tickets every year.

Effective loyalty programs drive customer behavior. They reward profitable behavior – they are structured to generate more frequent, higher value business from program participants. So why doesn’t everyone join your program? A look at the airlines reveals that about 50% of all passengers do not belong to the airline’s program. Customers participate in programs that are personally relevant. The public is inundated with offers to join various programs, but they will not participate unless they’re offered enough value to justify wallet-space. Marginal Airline offers end up in the trash while a favorite restaurant makes the cut by offering a free entrée every tenth trip.

Currency

Currency choice matters – it must be intuitive and the average customer should be able to calculate the currency’s value and identify the activity or behavior required to earn common awards. Consumers get it when their barber issues a card that requires ten visits to earn a free haircut. Simple, seamless, comprehensive.

The earliest airline programs called their currency ‘miles.’ Miles are intuitive – when a traveler flies between New York and Los Angeles – they’ll earn one mile of currency for each mile in the air. That’s 2,472 miles each direction in this example. Miles are the basic building block – they’re analogous to a penny. Once you ‘earn’ 25,000 mile you can redeem them for a free coach ticket (treating miles like pennies is equivalent to $250 value). Loyalty credit cards lean towards ‘Points’ and a typical value is one ‘point’ for every dollar spent. The pure credit card programs often offer travel awards as a redemption option so a currency that converts easily to ‘miles’ makes it simple for most consumers to adopt the ‘point’ system and it gives them confidence about an already well-understood earn and burn structure. In the largest programs points and miles are equivalent and fungible – it’s like a foreign exchange system, you can often trade airline miles for the same number of hotel points.

In recent years other airlines, particularly the low cost carriers adopted segment based currencies – Southwest Airlines Rapid Rewards famously offered a free round trip ticket every time a customer flew sixteen segments. It’s easy, but customers could earn a ticket after purchasing just three trips if the routing required double connections (three segments each way). The other end of that spectrum is the customer who bought eight round-trip tickets for non-stop flights before earning the free ticket.

Southwest’s program didn’t seem equitable, so Southwest updated Rapid Rewards to issue ‘points’ based on two variables – the type of ticket and the price. Now customers earn six points for every dollar spent on Southwest’s “wanna get away” leisure fares, while it takes 6,000 points to ‘buy’ the same type of ticket. A quick calculation reveals free tickets are available after spending just $1,000. It’s a good system, but it leaves program players shaking their heads to calculate earn and burn values quickly – members need to read their statements carefully.

Companies that offer separate programs for consumers and businesses should think twice before they create parallel currency and banking systems for each type of customer. Specifically, many domestic airlines offer consumers mileage-based currency through their frequent flyer program, while offering companies a spend-based, point currency in their business rewards program. A review of award menus at United and American reveals similar awards are offered through each program, but the redundant systems increase costs and management workload.

An example on the hotel side can be found in Starwood Preferred Business (SPB) program; SPB is integrated with Starwood’s Preferred Guest program and can be managed in parallel and through the same systems – this arrangement reduces the cost and eliminates currency confusion since both programs payout in similar fashion – the traveler accrues points in their individual program, while their employer accrues points in the Starwood business program. This co-mingling makes it easy on the front-desk staff too and the entire company is aligned with the program messaging.

Companies can manipulate value on both sides of the ‘earn and burn’ equation, so consumers need to be familiar with program rules on both sides – the less fine print the better. And don’t neglect cash controls – management often overlooks the cash value of their awards or loyalty currency. Robust controls must be implemented to ensure employees don’t have the ability to give points or awards away without comprehensive tracking and reporting.

Awards

Give ‘em what they want! If you sell widgets because people value them, it goes without saying that widgets should be on the award menu. In fact, your award menu should include ‘starter’ widgets, widget covers, widget ‘bonus-packs’ all the way to up ‘premium’ widgets. Airline awards begin with highly restricted, long advance purchase, mid-week, domestic, coach tickets, and move up to last-minute, international first-class, around-the-world fares. A collection of ancillary benefits are available too – including lounge passes, upgrades, cash plus program credit, reduced fees and other special awards. All priced in loyalty currency.

Hotel award menu’s include rooms, upgrades, all priced in ‘point-based’ currencies tied to spend and room-nights. Another popular option for larger hotel programs allows point transfers into airline miles.

“Earn and Burn”

Program participation must be simple, seamless, and comprehensive.  Loyalty program members should be able to attach their membership numbers or customer identification to their transactions easily. Their purchases should be tied to online profiles or a barcode or a RFID membership card. Companies should take action so members don’t need to remember their member numbers and, if they do need to remember them, companies should create as many opportunities as possible to add the number throughout the purchase or use process. Effective programs make it easy to claim credit long after the purchase.

Avoid obstacles that reduce participation. Awards must be meaningful to the customer – in its simplest form awards should have the following qualities:

  1. Meaningful
  2. Easy to earn
  3. Easy to burn
  4. Supported by seamless customer service
  5. Common currency
  6. Multiple award levels
  7. Bonus structure with point multipliers
  8. Relevant partners

Customer Service

Same rules – simple, seamless, comprehensive. Most common requests – 1. provide ‘earn’ credit; 2. Reset account access; 3. Merge accounts ; 4. Provide enrollment support; 5. Provide redemption support (complicated program rules will drive these requests up). Companies should acknowledge that customers want to communicate in different ways (phone, email, and text) and should offer customer service through common channels. If your program can’t support a live 24/7 operation, at least provide self-help online and find a way to show customers you appreciate their business.

Promotions and acquisition campaigns 

Collect the low-hanging fruit – that means a laser focus on your existing customers before you move on to new or potential customers. Advertise your unique value proposition, currency and program rules to your existing customers with your existing marketing and communication channels. As enrollments begin to climb study your data to determine characteristics your most profitable customers share and seek out non-customer populations that exhibit the same qualities or behaviors. Future campaigns should target those potential customers and develop creative A-B test groups to hone your marketing skills and test intuition about your customers. Enrollment offers should include ‘seed’ points or miles to jumpstart member participation. Follow-up campaigns should segment customers in meaningful ways including a group that have earned enough points for basic awards, but have never redeemed points or miles. The possibilities are endless, but a careful approach that combines your industry knowledge with insight about your most profitable customers will yield the best results.

Common sense and the desire to limit liability suggest acquisition offers should be richer in competitive markets, and lower  where the host has higher market share. Targeted offers and A-B tests may require you to use a promotion code system (one-time use codes are recommended to prevent wide distribution via the Web). Before you get too far down this path it’s instructive to educate yourself about ways promotions can go wrong so here’s a great Website you should spend some time on to avoid making similar mistakes.

Conclusion

This is just a glimpse into the loyalty cook book – these programs are important tools to manage the relationship between companies and their best customers. Done well,  thoughtful programs can give you an edge and drive bottom-line performance. Use this simple guide to create a solid framework as you invent your own program and embrace ideas from successful programs across multiple industries. Finally, ask yourself why programs and their components work and what conditions exist that drive customers to participate in them? Answer those questions and you’ll understand new ways to achieve better results.

Coaching Sales & Marketing Travel Management