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Is Your Web Business Sticky?

Do customer loyalty programs work for Asian American businesses?

By Ron Chepesiuk

Interacting with customers and sustaining enduring relationships stand at the core of doing business on the Internet. Keeping customers loyal, however, is not easy. Just ask David Liu, chief operating officer at YesAsia.com, a San Francisco-based e-business that sells Asian entertainment products over the Internet.

A few weeks ago, Liu and his staff at YesAsia.com “bounced ideas off one another” during its biweekly brain storming session. The objective: to come up with creative ideas that will not only excite the company’s regular customers, but also drive more consumers to its Web site. Liu has nicknamed the sessions the “three I’s meetings”. The I’s stand for initiatives (projects the staff is working on), issues (current problems) and ideas.

Five Trivia Questions from YesAsia.com's Customer Loyalty Program: 1. What is Hamasaki Ayumi’s blood type? A, B, AB, or O 2. What prefecture contains the hometowns of 3 of Glay’s members? Okinawa, Fukuoka, Chiba or Hokkaido 3. Where was Utada Hikaru born? New York, Los Angeles, Tokyo or Kyoto 4. What is the make-up of the Brilliant Green? Two girls and a guy, two guys and girl, three guys or three girls 5. Who writes songs for both Amuro Namie and Suzuki Ami? Amuro Namie, Suzuki Ami or Tsunku

“I begin the meeting by asking my staff: What new ideas do you have?” Liu explained. “If there’s silence, I make them feel the heat by showing them I’m unhappy. They need to think innovatively or our company will be in trouble.”

On this particular day, the staff talked about the success of the popular television game show Who Wants to be a Millionaire?. The staff loved the show’s concept, and they decided to produce a trivia quiz for their Web site, which would test its customers’ knowledge of Asian entertainment. The weekly winners get a $100 gift certificate and the runner-up a free item listed on the web site costing $40 or less. Contestants are encouraged to search the Web site for the answers.

The cost of implementing the project was minimal. It took two days for YesAsia.com’s product managers to design the contest’s format. Company employees familiar with Asian pop culture provided many of the questions. The result: increased interest in the Web site, Liu said.

“Practically every business Web site provides some kind of incentive that’s commonly called a customer loyalty program,” explained Craig Brown, chief technology officer at Pointclick.com, a Utah-based company that offers a customer loyalty program to e-businesses. “The idea behind them—to keep customers coming back to buy products—should be central to any company’s marketing strategy, but it’s something that’s difficult to do. When a consumer is on the Web, it’s not like he has to cross town to get to a store. He can click five times on a mouse and in a minute be at five different stores.”

Seven Ways Asian American Businesses Can Keep Their Customers Happy Jim Dion suggests that Asian American businesses practice these proven techniques to help them build better relationships with their customers: • Always keep your promises. • Always tell the customer that everything you do for them is guaranteed. • Develop an in-store database and add customer likes and dislikes to it regularly. • After a customer buys something, always tell them why it’s a good purchase to help them reinforce the decision. • In interacting with customers, use their names every chance you get. • Use letters, faxes, phone, E-mail, and newsletters to help keep customers informed of new merchandise. • Contact ten customers per day to keep them informed of new merchandise and items they might like. Don’t overdo it, though. Never make more than once eight calls per customer per year. • Phone a customer a few days or a week after they make a major purchase and ask them if they are satisfied.

The major airlines’ frequent flyer programs and bank-issued credit cards to its best customers are two examples of successful customer loyalty schemes. They have been used for some time in the brick-and-mortar business world, but the advent of cyberspace has brought the marketing strategy to another level.

Asian American businesses surveyed by AsianWeek say customer loyalty programs work, and are an integral part of their marketing strategy.

Himesh Patel, president and CEO of the Orlando, Fl.-based Innhanse Corp., a provider of technology solutions for the hospitality industry, explained, “Customer loyalty programs require much time and effort because the competition in cyberspace has become so intense. But they can work if a business thinks them through A to Z.”

Click2Asia is an example of an Asian American e-business that depends heavily on customer loyalty programs to build its business. Headquartered in Los Angeles, Click2Asia is a global Internet media company that targets Asians, Asian Americans and anyone interested in Asia. All programs at the Click2Asia Web site are free, but to use them, visitors must register and become members. Click2Asia currently has 700,000 members.

“Developing customer loyalty programs that work is a challenge for Click2Asia because we have such a diverse client base,” said Yumi Suh, head of public relations at Click2Asia. “But we’ve developed a number of what we call “sticky tools”, that is, programs that help us to keep our customers interested and coming back.”

Sticky tools at Click2Asia provide members with a number of benefits, including access to free long distance telephone calls, an events calendar, streaming media videos and the largest online singles space on the Web. Also, Click2Asia currently has a contest in which members can win a round trip ticket from Asiana Airlines.

At the heart of a customer loyalty program is a database, which e-businesses use to identify customers, track purchase histories, allocate benefits and measure the program’s effectiveness. As computerized database technology becomes more sophisticated, so has the ability of companies to monitor customer behavior.

“Everything we do in terms of customer loyalty is trackable, and that really helps to build our customer base,” Suh revealed. “ Suppose a customer buys a Jackie Chan movie video. Guess who gets a notification from us the next time we get an action film from Hong Kong?”

How sophisticated the tracking technology will be in the future is evident in a project conducted by Innhanse Corp. Over the next three years, the company will wire 400,000 hotel rooms with new technology. It will use the worldwide network of Internet links to gather extensive information about customers, which Patel said could help his company personalize its delivery of information.

Four Benefits of Customer Loyalty Programs • Serving loyal customers costs a business less • Loyal customers will spend more money • Loyal customers worry less about the prices • Loyal customers will spread the word about the business

Patel gave this example of how the technology will work: “Suppose a customer likes Chinese restaurants and he eats at one in San Francisco while staying at the Hyatt. We know that he will probably be looking for Chinese restaurants when he travels to, say, New York City. So our network would prioritize the top 20 to 25 Chinese restaurants in New York for him and even provide reviews.”

Still, some business experts are not convinced customer loyalty programs work long-term.

“Loyalty programs that seek to bond customers to a company and its products and services by offering an additional incentive pose an interesting dilemma,” write business professors Graham Dowling and Mark Uncles in Sloan Management Review. “Although those schemes often attract widespread customer interest, they are difficult to support, using the current knowledge of competition and buyer behavior.”

Trying to keep customers loyal, in fact, has led to disastrous results for some companies. For example, to attract customers, many e-businesses have initially offered free shipping, Brown explained. As a result, those customers expect that service free of charge the next time they make a purchase.

“Many companies have felt compelled to give free shipping every time a customer makes a purchase, so they haven’t been able to make a profit, Brown said. “That’s a big reason why many e-businesses have failed or are failing.”

Therefore, businesses must be careful in the way they develop and implement customer loyalty programs.

“Businesses have to do their homework, evaluate the costs and understand that they can’t offer something and then take it away a few months later,” said Jim Dion, president of Dionco Inc., a Chicago-based retail consulting group. “They must also make sure that they can communicate the program’s value to their customers.”

Dion noted that customer loyalty programs in the brick-and-mortar world don’t really differ from those in cyberspace, but he added, “If you’re doing business in both, you need to integrate the customer loyalty programs so that the customer is treated well in both the store and on the Web site. This isn’t easy from a technology point of view.”

Business analysts also point out that to keep the customers’ attention, Asian American businesses need to focus on all aspects of customer service. That means implementing such smart business strategies as putting a liberal return policy in place, giving customers the benefit of the doubt in a complaint, and hiring competent employees who will be well-trained to provide good product knowledge.

“If a business provides great customer service, adding a loyalty program can only boost a customer’s confidence and the feeling that the store really cares about their business,” Dion said.

Business reporter Ron Chepesiuk is based in Rock Hill, S.C. He can be contacted by e-mail at 110423.2656@compuserve.com.