Note to Starbucks CEO: Don’t use technology (or loyalty programs) to demotivate your employees

December 26, 2012

app and empty tip jar 4 color cropped

Summary: While the Starbucks App is cool and makes buying coffee and food quick and easy without dealing with cash, credit or debit cards, the company appears to have developed the app without fully considering the impact on their employees. The app doesn’t offer users the option to tip baristas when making a purchase.  Other mobile payment apps like LevelUp and even taxi cab credit card machines make tipping quick and easy for users.  The Starbucks Rewards program also concerns us as it rewards customers for paying for one item at a time, even when purchasing multiple items, which could lead to increased employee and customer frustration.

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Is the U.S. coalition loyalty’s Afghanistan? Overcoming the challenges of the U.S. market.

October 22, 2012

Afghanistan map with question mark.

Net: Coalition loyalty programs are among the most successful and fastest growing businesses created over the past 25 years, with flourishing coalition programs currently operating in many countries around the world. The one glaring exception – the U.S. market. Why? It certainly isn’t for lack of trying. Over $1 billion has been lost by companies and investors attempting to launch coalition loyalty programs in the U.S.

We believe the reasons no one has launched a successful U.S. coalition program are embedded in the five unique challenges of the U.S. market:

  1. Overcrowded loyalty space – the average U.S. household has joined 18.5 loyalty programs, but remains active in 8.
  2. Lack of nationwide or clearly defined regional businesses in major consumer spending categories – difficult to identify coalition partners with consistent presence across markets.
  3. Few unique rewards – lots of commodity-based, “me too” rewards.
  4. Rewards are expensive – economic value back has become only distinguishing feature; competitors continue to increase percent back to compete, raising overall costs.
  5. Lack of cooperation among U.S. companies – American companies have not historically “played well in the sandbox together” and few examples of long term coalition partnerships for anything exist in the U.S.

So what’s the solution – “cut and run”?  Not necessarily.  We believe there is a path to daylight to develop a coalition loyalty program in the challenging U.S. market. Doing so will require a breakthrough program model that not only incorporates the requisite 6 A’s of Coalition Loyalty Success, but contains the following  elements:

A. Truly breakthrough, motivating assets to cut through the current “clutter” of loyalty programs.
B. Better designed rewards inventory with a selection of rewards that appeal to consumers on both an emotional and rational basis.
C. Critical program elements and unique assets that cannot be duplicated by competitors.

D. A regional approach that makes sense in order to create a strong coalition of leading partners.

E. A technology platform that leverages the new user friendly opportunities for member engagement enabled by 21st century social, mobile and interactive digital media, and finally, most importantly

F. Bold, visionary, risk taking leaders who are willing to “play to win” instead of “playing not to lose” and will benefit most from being the first to champion the tremendous potential of  participating in a coalition loyalty program.
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The 6 A’s of Coalition Loyalty Success & The Virtuous Cycle of Profitability

March 21, 2011

The 6 A’s of Coalition Loyalty Success & the Virtuous Cycle of Profitability

Net: Over a billion dollars have been lost by companies and investors trying to create a profitable coalition loyalty program in the U.S. over the past 30 years. In recent discussions with Sir Keith Mills, who created the original AIR MILES shopping reward program and the first consumer focused coalition loyalty program in the UK, my former company The Loyalty Group in Canada, Nectar in the UK  and successful programs in The Netherlands, Spain and the UAE, we agreed there are six requisite elements of successful programs.  Rewards must be aspirational, attainable, and accessible to target consumers.  They must be sufficiently affordable to investors, program operators and the business partners who pay for the reward to enable a clear and attractive return on their investment.  The program must be designed and executed to collect actionable information on participating member’s behavior to both prove that the program is delivering an attractive ROI and to identify underperforming segments and new opportunities to use the program’s assets to increase the businesses’ profitability. Finally, participants must be aware of the program’s benefits.  They must be clearly and effectively marketed at launch and on an ongoing basis to create awareness and understanding of program value to potential and existing members and the businesses paying for the rewards.   If these “6 A” elements are present in the program’s design and effectively launched and enhanced through rollout and operation, the loyalty business generates an attractive virtuous cycle of profitability driven by the value created for all stakeholders.

The 6 A’s of Coalition Loyalty Success

6 A's Chart

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Collaboration Big Citizenship for Skateboarding in Brookline

February 3, 2011

Net: Realizing that our son had no dedicated places to skateboard in our town of Brookline, Massachusetts, my wife Patty organized a group of young skate boarders and parents, teachers, nonprofit and other leaders to advocate for the creation of safe places to skate in our community.  Although we have a lot of work to do and have only taken the first few steps in what will undoubtedly be a long journey, the collaborative efforts of our small but committed group, the over 100 friends who supported us online and the 60 young skaters and their parents who attended our presentation to the town’s Parks and Recreation Commission have successfully launched our campaign.


In his recently published book, my friend Alan Khazei – the social entrepreneur , Co-Founder of City Year and former candidate for the US Senate – makes the case for creating change through the collaborative efforts of public private partnerships, where citizen activists, business leaders and government agencies work together to address challenges and create new opportunities.  He refers to this model as Big Citizenship, advocating that the old models of relying too heavily on either big government or private industry are tired, ineffective and not appropriate for creating change in the 21st Century.

Big Citizenship CoverAlthough the concept of Big Citizenship is not intuitive to all, you clearly know it when you see it in action.  I had such an experience recently.  Realizing that our son had no place to skateboard in our town of Brookline, Massachusetts, my wife Patty organized a group of young skate boarders and  parents, teachers, nonprofit and other leaders to advocate for the creation of safe places to skate in our community.  Alan would see this as a clear example of the power of big citizenship, and I would agree. But I also see it as a compelling example of collaboration and, as we are beginning to increase our social and traditional media outreach, a great case study in how the internet can support and turbo-charge the efforts of a small but committed group.

None of this would have been possible without both Patty’s initiative and the phenomenal and strategic efforts of our friend Armin Bachman.  Armin is truly a Big Citizen.  (Last year I encouraged Alan to promote his book by starting a Big Citizen contest where people could nominate others for recognition; I had Armin in mind as a leading candidate.)  Armin is an entrepreneur; he is co-owner of Orchard Skateshop, by far the best skateboarding store in the Boston area.  He is a social entrepreneur, having founded the nonprofit Extension, to make skating more accessible in the greater Boston area.  Armin and

Armin and Myles the other owners of Orchard are big citizens in their community as well, giving 1% of their revenues to local nonprofits and helping new artists by hosting shows in the gallery above the shop.  He is also one very smart and connected dude, knowing leaders in the skateboarding space across the country and increasingly around the world, and very gifted at finding data related to developing safe places to skateboard.  (Full disclosure: Armin is also Myles skateboarding teacher.)

Other members of the original group included Nicco Berinstein, a Brookline High School 11th grader and avid skater; Eileen Amy, Nicco’s mother and a registered nurse; Michael McKittrick, a Brookline High School teacher and the faculty advisor to the school’s skateboarding club; John Wynne, a Cambridge businessman, skater, and a passionate skateboarding advocate; and our son Myles, an avid skater and the person who helped us see the need for safe places to skate in Brookline.

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Too little too late? Will Obama’s lack of collaboration kill health care reform?

February 13, 2010

Net: Obama’s failure to leverage the collaborative efforts of others, consider and include good ideas from his opponents and provide the requisite and timely leadership contributed greatly to congress’ inability to pass heath care reform.  Will the rhetoric and approaches of the last two weeks be enough to revive it or are they too little too late?

dr-mark-in-haiti2I have often wondered if there is a common event that gets people to start blogging.  I imagine for many it’s a topic or an issue they feel so passionate about that they feel compelled to share their thoughts with others.   For a wonderful example of this, see my friend Dr. Mark Pearlmutter’s blog from his two weeks as a volunteer in Haiti.

One thing I know for sure is what stopped me – jumping into the Citizens for Alan Khazei Senate campaign for the last 55 days of the 90 day special election to fill Ted Kennedy’s seat.  Since the campaign ended, I have had many posts “drafted” in my head, but have been experiencing some kind of weird writer’s block that kept my fingers from typing.   I began to fear that maybe leading 128 pages of policy work in under two months used up all of my words for the year!

As anyone who knows me knows – health care is my biggest issue and has been since my then six month old daughter was sick for the first time.  Fortunately, we were living in Toronto and had access to a wonderful pediatrician who returned our call at 10:00 in the evening and sent us to a world class children’s hospital a few blocks from our home.  I realized at that moment that there were millions of American’s who couldn’t have done what we did and became a dedicated soldier in the war to bring health care to all American’s and to lower the cost and improve quality for those of us lucky enough to have coverage.

I have written before about my frustration with Obama’s ineffective attempt to sell health care reform to the American people in the post What Obama can learn from Ross Perot, Cecil Underwood and Coalition Marketing.  Listening to some of his remarks about health care reform over the past ten days has me sufficiently agitated to start blogging again.  A few more suggestions for the President:

1. Look for others who have already collaborated and use them.

Last summer, I found an incredibly thorough bi-partisan proposal for health care reform called Crossing Our Lines: Working Together to Reform the U.S. Health System.  This report was written by former Senate Leaders Bob Dole, Howard Baker and Tom Daschle.  George Mitchell also was a major contributor to the project, but was not listed as an author on the final report after shifting all of his efforts to his role as special envoy to the Middle East.  The report was the product of a two-year consensus-building process called the The Leaders’ Project on the State of American Health Care.  Their plan is a comprehensive set of policy recommendations that aims to provide quality, affordable health coverage for all Americans and includes recommendations to improve quality and control costs.

crossing-our-linesHaving stumble upon this report, I was surprised that I had not heard of it from traditional news media or blogs, and disappointed that Obama wasn’t using this as a framework for his heath care reform efforts.  We used this as one of the primary sources for developing Alan Khazei’s health care policy during his race for the Massachusetts U.S. Senate seat.

Then, last week on either XM Radio’s POTUS or CNN, I heard the President refer to The Leaders report at least twice.  Saying,

“The component parts of this thing are pretty similar to what Howard Baker, Bob Dole and Tom Daschle proposed at the beginning of this debate last year.

“Now, you may not agree with Bob Dole and Howard Baker and Tom — and certainly you don’t agree with Tom Daschle on much … but that’s not a radical bunch. But if you were to listen to the debate, and, frankly, how some of you went after this bill, you’d think that this thing was some Bolshevik plot.”

“And so I’m thinking to myself, ‘Well, how is it that a plan that is pretty centrist… (more)

Why didn’t he use this as an example and – better yet – use Dole and Baker to help him sell health care reform over the past twelve months?

2. Collaboration means working together and using each other’s good ideas, not just giving them lip service.

RNC Chairman Michael Steele spoke at Harvard’s Institute of Politics last week. During his remarks, he mentioned that Republicans had offered over a dozen ideas and proposals for addressing the country’s dysfunctional medical malpractice system, but none of them were given serious consideration by the administration.    If Obama is serious about lowering the cost of health care, he needs to address medical malpractice, considered by many experts to be the major driver of defensive medicine.  The cost of defensive medicine has been estimated to be between $70 billion and $200 billion a year by PriceWaterhouseCoopers Health Research Institute and others.

Again, this idea is not new.  Bill Bradley wrote about the need to form a bi-partisan coalition to pass  health care reform and the opportunity to use medical malpractice reform as an issue that would bring Republicans to the table in his 2007 book, The New American Story. He made this point again in an August 2009 New York Times Op-Ed article, Tax Reform’s Lesson for Health Care Reform.

joint-commission1On the Khazei campaign, we reached out to our network of friends we were introduced to Dr. Alan Woodward, a former President of the Massachusetts Medical Society and a passionate expert on health care cost reduction.  Dr. Woodward turned us onto the successful approaches to medical malpractice reform being successfully implemented by the University of Michigan Health System and recommended on by the Joint Commission on Accreditation of Health Care Organizations. (I will write more about this in an upcoming post on the collaborate efforts of the Khazei campaign.)

Again, the answers are out there if you truly believe in collaboration and are willing to do the work to find them.

3. Collaboration does not mean abdication of leadership.

Anyone who has engaged in a truly collaborative effort quickly realizes that harnessing the wisdom of crowds takes work.  I recently experienced this when using to run a contest to develop a logo for a new organization among hundreds of graphic designers from around the world.  As John Della Volpe, the Founder of SocialSphere Strategies wrote about in a recent blog post, you need to provide leadership (a clearly written brief) and guidance (continuous feedback to initial and revised designs) to get a quality product when using this or other hugely collaborative processes.

President Obama’s lack of leadership on health care has been a concern to many of us who applauded his courage to take on this most important and possibly most challenging issue.  To me, his almost hand off approach through most of 2009 felt like a “guardrail to guardrail” over-reaction to the mistakes of the Clinton administration’s health care reform efforts.  Whereas the Clinton approach is remembered as one where Hilary Clinton, Ira Magaziner and a few others developed in closed meetings the plan they expected congress to pass, the Obama administration’s approach was almost the polar opposite.  The President’s instructions to congress to “increase coverage without increasing the deficit” and his failure to make a major address about health insurance reform until late summer are two examples of the lack of leadership he provided, with what we now see as disastrous results.

According to Politico Pulse – a great new source of information I recently found on my Kindle - at the closed door session with Democrats last week, Al Frankin and others raised this concern:

Sen. Al Franken ripped into White House senior adviser David Axelrod this week during a tense, closed-door session with Senate Democrats.   Five sources who were in the room tell POLITICO that Franken criticized Axelrod for the administration’s failure to provide clarity or direction on health care and the other big bills it wants Congress to enact.

Obama has scheduled a Health Care Summit meeting with Republicans on February 25th.  Lets hope he provides both real collaboration and leadership and that it won’t be too little too late.