With 52 million members, InterContinental Hotels Group’s (IHG) loyalty program, Priority Club Rewards, enables guests to earn points when checking in at nearly all IHG’s 4,500 hotels worldwide. The Priority Club Select Visa, the credit card connected to the loyalty program issued by Chase, serves as an extension of the IHG brand and lets members enjoy greater rewards and loyalty status at establishments such as Holiday Inn, Candlewood Suites and Crowne Plaza Hotels & Resorts.

Background

In the spring of 2009, IHG and Chase planned to relaunch the Priority Club Select Visa and wanted more conversational feedback and insight into new card features than traditional market research could provide. They turned to Communispace, a provider of private online communities, to rally a pool of 300 current Priority Club Visa cardholders willing to share their opinions on what card benefits and services are important.

Challenge

IHG and Chase kicked off the Priority Club Rewards community in June 2009. The goal was to align the new loyalty product with what core customers revealed as valuable traits in a “top-of-the-wallet” credit card. They wanted to explore rewards benefits such as free hotel stays and needed to find out how much of an annual fee customers were willing to pay on the card. In terms of card usage, “We weren’t seeing as high engagement as we would have liked to have seen,” said Sari Bernardo, alliances marketing manager at InterContinental Hotels Group.

Over the course of a year, IHG and Chase set out to talk to customers about their experiences with credit cards—what drives their usage and what specifically Priority Club Rewards and Chase could provide to capture more of their customer’s current spending. The team set an objective to double card penetration among its loyalty members and focus on the elite tier of its customer base—frequent travelers who hold Gold and Platinum reward status in the loyalty program.

Strategy

With help from Communispace, IHG and Chase walked community members through various scenarios and asked their thoughts about annual fees, rewards and loyalty-point redemption. The Priority Club team sought to engage cardholders with a variety of card usage, but it especially wanted to hear from customers who have a card but don’t use it on a regular basis.

“Our primary objective was, how do we get this new product right?” said Andrew Light, director of the IHG partnership at Chase Card Services. The discussions included design, marketing materials and “how we talk about features and benefits,” Light said.

Seeking to boost customer spending on the card and acquire new qualified cardholders, IHG and Chase focused on implementing new features that community members expressed were of value to them. For instance, community members suggested a new reward: an annual free-night certificate that could be used worldwide with no black-out dates. They also encouraged the Priority Club team to offer no foreign transaction fees when using the card abroad.

In addition to IHG-related benefits, it became clear to Chase and IHG that in order to drive engagement and regular spending with the Priority Club Select Visa, they needed to give consumers something back for everyday purchases. They introduced product rewards for cardholders that gave two points per dollar on gas, grocery and dining purchases. When cardholders spent with IHG, they earned five points per dollar. One community member, Bernardo recalled, did the math to see how many points he would earn by using his card, which he would redeem for a free night at Holiday Inn. “Free nights are actually obtainable in a reasonable amount of time,” the member concluded.

From the new-benefits discussion came the question as to whether community members would be willing to pay a higher annual fee in exchange for greater value. IHG and Chase proposed a $49 annual fee—up from $29 on the legacy credit card—to balance the program’s new benefits. “The annual free-night certificate justified that cost for them,” Bernardo said.

Results

Before officially launching the card in June 2010, IHG and Chase ran its marketing materials by the community. Members advised the team on features to tout and even helped pinpoint the imagery for the credit card’s official landing page.

Chase and IHG promoted the card through multiple channels. Email offers delivered particularly strong results. The initial email campaign for the new product yielded an 80% increase in new accounts when compared to the previous 2010 email campaign for the legacy card product. Chase and IHG also saw a 53% lift in the response rates from existing customers opting to upgrade to the new card. Also, 50% of cardholders who upgraded to the new product switched from a previous no-fee version of the card.

Key Takeaways

The Priority Club Rewards online community demonstrated the power of crowdsourcing to give customers what they truly wanted. For IHG, the customer community also acted as a sounding board for ideas and topics related to the hotel chain. Customers voiced several customer service-related issues, for instance, and IHG and Chase helped work out a few bill-paying glitches. IHG said it has begun to notice residual benefits—lifts in both spending and activity with the card.

“We’re attracting a different type of customer than we did from our legacy product,” Bernardo said. “We’re attracting even more elite members, those Gold and Platinum very frequent, heavy business travelers.”

IHG and Chase have been able to optimize their communications and marketing efforts because of insights from the community. For example, the majority of community members argued against Priority Club Rewards marketing the product via social networks, citing it “too commercial” for that type of environment.

Next Steps

Six months later, the Priority Club Rewards community remains live and has no intended stop date. The community will continue to serve as a learning mechanism for Priority Club Rewards, helping with both ideation and customer service. “The community,” Light said, “will help us with innovation to keep the card ‘top of wallet,’ fresh and valuable, and keep us ahead of the marketplace.” Currently, the team is engaging the community on the reward-redemption experience and how it affects cardholder satisfaction.

With Thanksgiving weekend expected to be among the biggest online shopping times ever, several fashion- and shopping-related websites have been making headlines, blending online shopping with more interactive experiences. But Google Boutiques, which debuted in beta last week, isn’t getting the same rave reviews as Fashism. Fashism is a year-old start-up that is garnering a lot of buzz having raised $1 million from the likes of Ashton Kutcher, Demi Moore, angel investors and fashion mavens, and now has the funds to kick-start growth. New products from Google get buzz automatically; however, Fashism earns this buzz by providing social networking

Consumers, addicted to using social networks to connect with friends and business associates, want to interact with people while shopping online. And those people don’t even have to be their friends. According to a Carat and Microsoft Advertising report titled “New Shopper Journeys: How Touchpoints Lead to Purchase,” 14% of US internet users would ask for advice about shopping decisions from people online they don’t personally know.

Google’s Boutiques.com, on both its website and iPad app, allows users to take a style quiz, refine preferences and create a personalized boutique. The experience becomes social only when they begin following other boutiques created by celebrities, designers and friends. (Although users can receive recommendations based upon their tastes, these are site-generated, not user-generated.)

This recommendation feature is not incredibly useful for most shoppers, unless you’re obsessed with Mary-Kate Olsen’s style or plan to stick with the “edgy” look day in and day out. As for the user experience, it comes up short—functionality is limited and the site itself feels like a regular shopping site that’s trying too hard.

Fashism, which also has a website and mobile app, uses crowd sourcing to allow consumers to discuss possible purchases or outfit suggestions. By centering around feedback rather than the items themselves, Fashism is inherently more social, allowing users to get outside opinions on how to wear certain pieces and which accessories would work best with an outfit. Fashism users don’t actually need to know anyone else on the site in real life, and can simply upload a photo or email an iPhone picture to ask questions of the community. Additionally, they can earn points for being “helpful” and unlock discounts for being active on the site.

Many online buyers are looking to get involved with a retail community because they value information from like-minded consumers, an activity Fashism makes a central feature of its site and Boutiques.com ignores.

Ultimately, users will gravitate toward the sites that fit their needs. Boutiques hasn’t been able to identify those needs, at least not on a mass scale. It is just for women’s clothing for now, and doesn’t allow for as much peer-to-peer interaction. Marketers and retailers will pay attention because it’s Google-backed, but that won’t really matter because shoppers will lose interest quickly.

With more than 80 million users, LinkedIn has long been the top social network for the business crowd, and has grown quickly as a tool for recruiters and sales teams looking for new leads and connections. But what about brand marketing? Yes, LinkedIn has “Groups,” but they have always driven far less traffic, engagement and brand awareness than Facebook pages or Twitter—and as a result, LinkedIn has always been a something of a second-tier destination for tactical social marketing.

With the recent launch of Company Pages, LinkedIn is trying to change that.

The unique attraction of the new feature, said LinkedIn CEO Jeff Weiner in a press release, is to take “product and service recommendations to another level, allowing professionals to benefit from the considered perspectives of those whom they trust and relate to the most—the people they know.”

In addition to allowing written recommendations from customers and clients, Company Pages lets marketers post product listings, informative videos and online promotions, and offers targeted advertising capabilities based on users’ geographic locations and titles.

This recommendation aspect, expanding on LinkedIn’s core mission of allowing users to recommend other members, goes a step beyond the concept of “liking” or following a brand and becomes more of an endorsement. A written recommendation for a company’s products requires a significantly greater commitment, can carry more weight, and be a stronger reflection of a brand’s online popularity.

More than 3,700 companies have set up their Company Pages in the week since the program’s launch, including JetBlue, HP, AT&T and Kodak, and B2B companies seem especially excited. We recently chatted with Anna Griffin, VP of global brands and campaigns at Juniper Networks:

This is a brilliant move by LinkedIn to take a job networking opportunity and turn it into a valuable b-to-b recommendation and endorsement. When I think about what this could become…it’s going to make for a really strong recommendation platform, not just an “I Like it” or “I Digg it.”

Social marketers in both the B2B and B2C arenas will certainly test Company Page product recommendations vigorously in hopes of seeing the same viral impact offered by Facebook and Twitter. Whether marketers will see any impact at all, however, is a big question: LinkedIn is not exactly known for overwhelming engagement. And while B2B marketers might see the occasional product recommendation with Company Pages, it’s difficult to imagine seeing any significant impact on the B2C space. (Will anyone be up for recommending 3M Scotch Tape, McDonald’s Happy Meal, or Tide Original with Bleach Alternative on LinkedIn? Doubtful — especially considering they can already “Like” those on Facebook with relative ease and minimum involvement.)

Which leaves us with B2B. Is it possible that the social network’s mostly-business audience will start recommending company products like the Dickens? Sure, it’s possible. The big question is whether these recommendations will actually influence other peoples’ purchase behavior — and if it does, brand marketers may have finally found their “in” with LinkedIn.

When Facebook launched Places, the social network’s long-awaited location-sharing feature, in August, it was accompanied by a couple of key assumptions. One was that 800-pound gorilla of the social networking space, with its 500 million total users and 100+ million mobile users, would take the check-in mainstream. As my colleague Debra Aho Williamson sagely put it in an eMarketer blog post:

Right now, checking in is a fairly niche activity. Places will introduce a lot more people to the concept. Facebook has already shown that it can drive big changes in people’s behavior—just look at the popularity of status updates. Checking in is another one of those behaviors that Facebook can easily push toward mass acceptance.

Another was that the launch of Places signaled the death knell for foursquare and other location-sharing services. But as it happens, the reports of foursquare’s death have been premature. In fact, since the launch of Places, foursquare’s user base has continued to surge, growing from 2.6 million on August 12th (according to a tweet by CEO Dennis Crowley) to 4 million on October 21st. If it continues at its current pace, foursquare is projected to top 5 million registered users by the end of November.

In addition, while Places has built-in scale, it doesn’t necessarily top foursquare in engagement. According to some recent (and admittedly rough) calculations by Silicon Alley Insider (SAI), a large number of people (a reported 30 million) have tried Places, but more people check in on foursquare on a more regular basis. Blame a lack of compelling features, such as game dynamics, that give foursquare a lot of its appeal. On the other hand, engagement and usage metrics, even the somewhat speculative data assembled by SAI, that disproportionately favor the smaller foursquare over the much larger Facebook, serve as further evidence that two can peacefully coexist.

The big question is: what would make Places more compelling? With yesterday’s launch of its Deals program, Facebook is betting the answer is commerce.

Why Places + Deals is important to Facebook:
First, the opportunity to save money will give Facebook’s base of mobile users, now 200 million-strong, a reason to use Places to check in. The success of group-buying services such as Groupon and flash sale sites like Gilt has demonstrated that consumers will jump at the chance of a good deal. The fact that Deals is launching with a roster of 22 national brands, including the Gap, H&M, McDonald’s, Starbucks, Macy’s, American Eagle Outfitters, JCPenney and Chipotle, proves that Facebook is serious about driving adhesion. In many cases, the inaugural deals mean discounts, but Starbucks and McDonald’s, for example, are offering donations to charities in return for checking in, reminiscent of a successful program non-profit Earthjustice has run with foursquare.

Facebook also recognized the need to include a mechanism to drive ongoing usage. In short, Deals is not about the one-shot deal. Rather, merchants have the option of using the platform as a virtual loyalty program or punch card to reward repeat buyers. This is a smart move that could counter some of the criticism leveled at services such as Groupon and one that will make Deals more compelling for users and businesses alike.

Why location-specific deals make sense for marketers:
Location information, which provides insight into not only place but also context, enables marketers to deliver a compelling offer or reward when consumers are at the point of decision. In yesterday’s geo-location sessions at the ad:tech New York conference (coincidentally scheduled at the time same time as Facebook’s Deals announcement), WHERE CEO Walt Doyle noted that reach, relevancy and redemption are the key factors in the location game.

Cracking all of those nuts simultaneously and with the same degree of success is challenging. Facebook can do its part by offering scale and ease-of-use for the business owner, whether a national brand or single proprietorship. But platform and scale alone are not sufficient. Ultimately, the success of Deals depends on, well, the deals that merchants offer. Unless they’re consistently attractive, consumers will lose interest or not sign on at all.

Will Deals alter the dynamics of the marketplace?
The answer is yes, but the impact of Deals will be felt differently throughout the geo-location ecosystem. Although foursquare was absent at yesterday’s launch, Groupon and Loopt, two companies that are farther along than Facebook in marrying location and offers, were present. The single-click sign-on feature that Facebook announced as part of the enhancements to Places will enable deeper integration between Facebook and other location services, which, in theory, at least, will give Facebook more appeal as an aggregator, a value proposition that will likely extend to commerce as well.

Could Facebook, with its reach and resources simply blow its erstwhile competitors out of the water? Given the inclination, the answer is probably yes. But Facebook understands a) the value of the ecosystem (a lesson perhaps learned from Google, now Facebook’s primary competitor in the digital space); and b) its limitations in being all things to all people and all companies. Fast Company described the post-Places opportunity for services such as foursquare and Groupon in the following terms:

Their long-term sustainability will probably rest on the same thing that enabled the Mac to survive in a PC world: A decision to eschew the urge to be everything to everybody and instead to focus on a customer segment they will always be able to serve better than the big boy.

Deals may not be perfect, it may be “cruder,” in Fast Company’s estimation, than similar offerings, but assuming that Facebook is on to something here, Deals could have a significant impact in the marketplace. It could also offer a big boost to mobile-assisted commerce and make mobile not only a more viable but also more necessary channel for reaching consumers.

Over the past few weeks, I’ve been interviewing marketing executives for an eMarketer report looking at budgeting for social media in 2011. It’s been a fascinating exercise; the businesses I’ve spoken to are quickly leaving behind the experimental stage and moving toward full integration of social media.

One of the key questions confronting marketers as they develop their 2011 budgets is how much emphasis they should place on their branded Facebook page, and how much action (and interaction) they should logically expect. Last week, Shiv Singh, head of digital for PepsiCo Americas Beverages, asked this question of his Twitter followers:

It’s an important thing to ask. There’s been a long-held belief that consumers are too busy interacting with friends to pay attention to brands in social media. But Facebook’s Like button has changed that. In a study of the ways US Internet users interact with brands online, ExactTarget found that 38% have followed at least one brand by clicking on a “Like” button, while 5% followed at least one brand on Twitter.

According to a survey by DDB Worldwide, 27% of people who have liked a brand on Facebook say they often click that little thumbs-up button, and an additional 49% do it occasionally.

These brand interactions are growing, but by no means are they taking the place of interacting with friends. ROI Research and Performics found in a survey conducted this past spring that 25% of US Facebook users visit company or product pages, but 54% make comments about other people’s posts.

What does this mean when it comes to budgeting for social media next year? A few things:

• Consumers are more willing to interact with branded pages. It’s time to banish the idea that brands are ignored in social media. Brian Solis predicts in his blog that because of Facebook’s position as the center of social interaction on the web, by this time next year, marketers will spend “more time and resources on Facebook than you will on Twitter.”
• Interactions with branded pages will be a key metric to watch in 2011. As Singh’s question indicates, it’s one thing to know how many Likes you have, but how often do those fans actually interact with your page? The top brands on Facebook may have millions of followers, but the more important metric will be their actual interactions with the brand (and, of course, the effect of those interactions on product sales).
• The Like button isn’t just for social media. Jennifer Van Grove, writing on Mashable, described how the Golden State Warriors basketball team increased its Facebook “like” base by 20% by sending e-mail marketing messages asking fans to like the team in exchange for an opportunity to win tickets to preseason games.