Heady rewards for loyalty

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Whether its a private photo shoot with celebrity photographer Annie Liebovitz or a custom-built igloo for a family vacation in Canada, high-income consumers are interested in being rewarded by marketers for their patronage in one-of-a-kind ways.

"People who are at very high income levels care about frequency programs," says Rick Barlow, CEO of Frequency Marketing, Cincinnati. "They're not just about rewards, they're about recognition and people in those positions assume they deserve recognition."

So, along with requisite store discounts and travel awards, companies catering to wealthy consumers through loyalty programs offer special access and services.


Neiman Marcus, which created InCircle 16 years ago, has always searched for ways to cater to its best customers. InCircle members can cash in points -- one point is earned for each dollar spent -- for a snakeskin-patterned Nokia phone cover (10,000 points), a trip to Los Angeles for a movie premiere with InStyle (100,000 points) or the photo shoot with Annie Liebovitz (1 million points).

Car fanatics can trade points for one of six automobiles from 500,000 points for a 2001 Volkswagen Blue Dog Beetle up to 5 million points for a 2001 BMW Z8 convertible.

InCircle members, who must spend $3,000 a year using their Neiman Marcus credit cards before being eligible for the program, have an average household income of $569,373 and an average net worth of almost $2.4 million, according to a Neiman Marcus customer survey.

"The upscale customer is always looking for added value," says Billy Payton, the creator of InCircle, now senior VP at Brierley & Partners, Dallas. "To me, there are five key elements that a true loyalty program needs: fun, emotion, simplicity, reliability and relevancy."


Neiman Marcus sibling Bergdorf Goodman created its first customer rewards program last year. Like InCircle, the retailer rewards loyal customers with luxuries such as a first-class trip to Sweden's Ice Hotel (500,000 points) or head-to-toe attire for two so that they'll be well-dressed when taking advantage of their complimentary tickets to the Tony Awards (750,000 points).

"To them it's a gift to themselves," says Michael Calman, senior VP-marketing at Bergdorf Goodman. "That, I think, is a very important part of a loyalty strategy. Many of these items are not things you would necessarily buy yourself or expect people to give you."

Instead of designing elaborate rewards catalogs, FAO Schwarz and Saks Fifth Avenue stick with merchandise as the primary means of rewarding customers.


The two retailers, like many of their competitors, offer special services such as member shopping nights, previews of new collections, free delivery and invitation-only access to special events.

"We know that our customers are looking for special access and are always trying to come up with programs that would enable them to get that," says Cindy Mark, director of marketing at Saks.

Loyalty program members receive regular updates from retailers tracking points earned and detailing special rewards and programs. High-end programs are promoted to new customers through point-of-purchase advertising in stores and on some company Web sites.

While travel discounts are still the most popular reward within Merrill Lynch & Co.'s Signature Visa rewards program, the financial services group began adding special event offers last year and recently increased publication of its program newsletter from quarterly to monthly to provide more current reward information to members.

"That's how you can distinguish yourself: getting access," says Nancy Kelly, VP-director of loyalty marketing at Merrill Lynch.


American Express Co.'s Centurion card, a $1,000-a-year credit card offered to a select group of platinum cardholders, added a new level of service to customers using the company's Membership Rewards program. Customers using the sleek black card are assigned a personal concierge and travel planner as well as membership in elite levels on four airline frequent-flier programs in addition to the standard benefits.

Mr. Barlow, a Centurion cardholder since last year, describes the coveted card as a "loyalty program masquerading as a product."

Loyalty programs "get you to a level of status that you would otherwise not be able to achieve," he says. "In this age of new wealth, those kind of strategies can be very effective. Getting the wealth is one thing. Getting the recognition is another."

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