THE LOYALTY PROGRAM AT J&R MUSIC WORLD AND CONSUMER LOYALTY TO THE iPOD (Originally posted at BeyondthePod.com)

(Original post: http://blog.beyondthepod.com/2007/06/26/the-loyalty-program-at-jr-music-world-and-consumer-loyalty-to-the-ipod/)

So I was reading that back in 2006 J&R music was “testing a loyalty program developed with San Francisco-based services provider Loyalty Lab.” The full article is here.

I wonder how that worked out? When I think about such loyalty programs they seem to lack real punch. I mean J&R needs to drive customers to their specific online e-commerce site when most consumers drift to what J&R calls “aggregator” sites.

The interesting problem is that most consumer loyalty is to a brand such as the iPod. The consumer’s loyalty is not necessarily connected to J&R. How can J&R capitalize on the consumer’s loyalty to the iPod and drive consumers to their specific web site?

The loyalty program they ran at J&R looks like it spiffed the consumer gift card by 2% or so for navigating directly to their consumer site. The reward is just not significant. I’m sure on the corporate books the reward looks monumental to the VP of Finance — digging a massive gouge into the margin. But the actuarial perception of the incentive is exactly the opposite of the perception of the consumer.

The consumer’s perception of a 2% spiff is actually creating a negative impact in the marketplace. The consumer thinks, “Is that it?” or “Is that all that a supposedly great store like J&R con do for me?” Such a small incentive actually damages customer loyalty rather than growing it. This is the risk of low impact offers.

Now what if J&R offered a J&R gift card for a used iPod of used Gaming Console the consumer previously purchased at J&R (or anywhere else for that matter). Consider how many more purchasers of new iPods would go to J&R specifically if the knew they could get a near premium price in J&R store credit for their old iPod to put towards their new iPod.

GET IT TO ME BETTER, FASTER, AND CHEAPER: A DISCUSSION OF "REPRODUCTIZATION" (Originally posted at the BeyondthePod.com Blog)

(Original post: http://blog.beyondthepod.com/2007/06/07/get-it-to-me-better-faster-and-cheaper-a-discussion-of-reproductization/)

Consider the business of cars. Consider the business of houses. Each in their own way have created reproductization economies around their manufacture, sale, lease, and re-purchase.

In many ways as the “usage period” of a product drops and the endurance of its materials persist beyond their usage and as maintenance and repairs are made easy and accessible—any product can become part of a “reproductization” cycle.

In fact, the faster a “usage period” for the purchasing consumer passes, the more likely the longer term viability of reproductizing a consumer good.

I find the “lease” of a car, instead of a purchase, an interesting economic model. Also, I like the idea of a business that helps me accelerate my ability to get into my next car quickly and easily.

For example, I would gladly pay $1000 a month to drive a different car every month—or if I chose to—the same car (but with the option at anytime to get into a different car).

I don’t mind if the car isn’t 100% new. For if it is “nearly new” or at least this years model that’s good enough.

The problem with treating cars in this fashion is that they lack “efficient transfer” models. When I’m done with my red Porsche in Riverside how does Jane in Eureka get it quickly and efficiently a few days after putting in her request?

While this model may not work for cars, wouldn’t it be cool to be able to move into different models of MP3 players each month?

Or wouldn’t it be cool to “lease” a PS3 and then, after a few months, send in the console and the games and get a Wii with a set of games. Perhaps a month or two later, I could revert to GameCube and its games! And then on to xbox 360, and the next generation of game consoles yet to be announced.

I can imagine all this easily viable for the price of about 15% of the cost of any one console. Why wouldn’t I pay 15% of the cost of a console and its games to “lease” it per month?

In this way reproductization is rapidly accelerated. Such a system, I contend, would reduce e-waste castoffs, increase the total number of consoles manufacturers would sell, and increase the rate at which new items could be brought to market.

One of the tricks of electronics is that great new products can’t meaningfully overlap because the market has to have time to saturate. Imagine a system of flowing new products into and out of the hands of consumers that massively increases the rate at which saturation for any one product and has built in efficiencies to flow “great new products” into the hands of consumers.

Today I might have a Zune and a Wii. Two days from now I could have an iPod and a GameCube…a month or so from now I could cycle into an iPhone and a PS3. All for $37.99 a month! Just a thought…

While not exact analogs for the model of reproductization I discussed, the following businesses are interesting in how they fit into the “reproductization” market:

Bag Borrow and Steal
Get a designer purse, get bored with it, send it back in and receive a different one of your choosing.

TicketsNow / StubHub
Sell your old tickets. Buy cut rate tickets for the latest shows.

Hewlett Packard
Trade in your old HP elctronics.

SUNFLOWERS FROM APPLES (Originally posted at the BeyondthePod.com Blog)

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(Original post: http://blog.beyondthepod.com/2007/06/01/sunflowers-from-apples/)

From CNN:

Materials company Pvaxx Research & Development, at the request of U.S.-based mobile phone maker Motorola (MOT.N), has come up with a polymer that looks like any other plastic, but which degrades into soil when discarded.

Researchers at the University of Warwick in Britain then helped to develop a phone cover that contains a sunflower seed, which will feed on the nitrates that are formed when the polyvinylalcohol polymer cover turns to waste.

As a consumer, I have begun to amass piles of secondhand electronics, my immediate reaction to this is denial. I don’t see the 10 cell phones in the shoebox in the garage. I ignore the three different game stations in the attic’s busted up cardboard boxes. I pretend I don’t have that third iPod in the basket on my bookshelf. I don’t acknowledge the problem until I am overwhelmed by the problem Until my secondhand electronics seem to be crawling out of the woodwork like ants—I will do nothing.

Well, my seams are at a breaking point and I am beginning to admit I am powerless over my own desires. I want the new iPhone, I want the Wii and I want to get rid of my old iPod and my GameCube. But because I am lazy, I will probably think of my existing iPod and GameCube as barriers to my purchase of the iPhone. But only so long as I can stand it. Then I will break down and buy a Wii and an iPhone. Probably on the same day.

To be honest I wish my iPod and GameCube had one of those Sunflower seeds in it as documented by CNN. CNN documented a cell phone case manufacturer that builds covers that bio-degrade and sprout into a sunflower. If I knew a sunflower would grow—I’d open my sliding glass door and bury my Game Cube in a big pot and hope for the best.

But, because my GameCube won’t grow a sunflower or even a dandelion for that matter, I’d like to do something with my GameCube other than pass along my personal garbage to the local landfill. What I’d like to do is have a small box from BFI or Waste Management that I could drop an item or two into. I want Waste Management to pick up my iPod or GameCube and then tell me they have given me $25 in credit toward my trash bill. Then I will feel good on 2 accounts: 1) I believe that they are “recycling” the device & 2) I like getting $25 for my conscientious act.

Am I dreaming? Maybe. But I see a near future where most “hot” electronics are re-productized and sold into the second hand marketplace to “first-time” buyers. I can see a future where a preponderance of first time buyers of Apple’s iPhone are buying one secondhand. I can see a world where the trade-in of the iPhone is as simple as dropping it in a locked recycle bin so it can be circulated back into the marketplace. I can imagine a market where a first-time buyer of an iPod is buying the re-furbed iPod with a bio-degradable cover (that will sprout into a sunflower or, hell, a green bean plant or a stalk of corn).

Around Northern California the trend toward “green” initiatives” has penetrated all walks of life and if this region is a barometer for the rest of the country then look out for the next 1000 Prius’ coming to your community soon. Speaking of cars: we accept that we can re-purpose cars, vend them in as an upgrade path, and that more efficient/greener cars are on our horizon. I believe a similar trend will overtake the electronics marketplace. For a starting point check out the guerilla marketers over at http://greenmyapple.com or http://www.greenpeace.org/apple/ !!!