David Raab Article Archive

West/Marketing Associates Loyalty Magic
David M. Raab
DM News
July, 1997

Can a $995 piece of PC software replace a half-million dollar campaign management system?

No–or at least, not yet. But $995 does buy one critical piece of sophisticated campaign management: multi-step, event-driven promotions. And it gets you a point-based loyalty system in the bargain.

Loyalty Magic (West/Marketing Associates, 303-759-9247; www.westmarketing.com) originated in Australia, where in just over a year it has been sold to more than 500 companies. The system was originally designed to help firms manage relationship building programs by sending appropriate letters to customers based on behaviors and events. It has since added the ability to issue, accumulate and redeem points based on loyalty-club member purchases as well.

When a program promises as much as Loyalty Magic, it’s tempting to begin with its limits. To start with the obvious, the $995 price is for a single-user version only; a client-server version to handle large customer bases costs $8,995 plus $200 per location or $25,000 for an unlimited number of locations. On a technical level, the system lacks some refinements of advanced campaign managers: it cannot define file segments with complex logical statements or formulas, split a segment into test and control groups via Nth or random samples, specify the number of people contacted within a business site or consumer household, or limit the total number of customers contacted with a specific promotion. Nor does Loyalty Magic include software to identify customer records belonging to the same household, predefined promotion analysis reports, an unattended job scheduler to execute promotions automatically, file export utilities, or advanced database technology to improve performance on large numbers of records. On the other hand, these features are sometimes missing from some systems costing twenty times as much.

What Loyalty Magic does offer is a remarkably complete set of features for defining relationship and points-based loyalty programs. The system is built on a fixed data structure, with separate tables for customers, sales transactions, non-purchase events, and promotion history, as well as reference tables of products, letters, and codes. Up to twelve people can be assigned as contacts within each customer; each person has a separate name, address, transaction history, etc. The contents of each table are also fixed, but include a reasonably complete assortment of data elements–for example, sales transactions include batch number, date posted, description, member number, product ID, product cost, reference number, quantity, catalog number, location, date, time and sale amount. Similarly, the product table stores a product code, description, barcode, cost, regular price, special price, supplier, loyalty points, and other elements. The customer record is the most flexible, allowing up to fifteen user-defined fields. Five of these can be linked to lists of permitted values, while the others are assigned types including date, anniversary, numeric or text.

Data is typically loaded into the system from flat ASCII files generated by point-of-sale, accounting or customer management systems. Wizards help non-technical users to set up the import process. Customer records could also be added or edited directly on system screens.

The system comes with 100 standard letters, written in Microsoft Word. These can have fixed text or be personalized with data from the Loyalty Magic files and can be modified as needed by the user. Letters are attached to marketing programs. In each program, the user can specify the criteria that people must meet to be included, how often the letter is run, how many times the letter can be sent to a specific individual, how long to wait between repetitions, and mechanical details including whether to run labels and which printer tray to use. Criteria fall into fairly simple predefined categories, including time since last purchase, “anniversary” events such as birthdays or warranty expiration, purchases of specific products or product categories, events such as complaints, total purchases exceeding a specified dollar amount in a specified time period, making a referral, and customer or contact type. To use criteria that cannot be expressed with the predefined categories, users would need to post an appropriate value to a user defined field through a query or matching process run outside of the system, and then select on that value. The system can link multiple letters in a sequence, with a specified interval between each letter, and direct customers who end one sequence to the start of another sequence. Users can specify the minimum period that must elapse between the last letter sent to a customer and sending a copy of a particular letter. This can both limit the amount of mail received by a customer and set priorities among letters.

Letters are generated by selecting a batch type (daily, weekly, monthly, etc.). The system displays the list of letters included in the batch and waits for the user to press Run. It will then execute the selection logic and give a count of the total letters to be printed. It cannot give counts by individual letter, so letters requiring different paper stock would ordinarily be put in different batches or directed to different paper trays.

Loyalty Magic’s point-based rewards module offers a similar level of sophistication. The system can assign points based on the dollar amount of a transaction, or on additional factors including time of day, day of week, product, category, customer type, location, or offer expiration date. Points themselves can be assigned expiration dates, which are checked at time of redemption. The system can also generate customer statements showing point balances and provide audit reports on redemptions to prevent fraud. The system can be linked to display units that let customers query their card balances directly.

Loyalty Magic is written in Microsoft Access and runs on any version of Microsoft Windows. The single-user version stores its data in the Access database, while the client-server version currently uses Microsoft SQL Server and could be linked to other relational database through ODBC connections. Users are currently expected to write their own reports in Access or any other tool, although the vendor plans to add standard reports in future releases.

* * *