Coming Soon: TV Loyalty Programs
I like to think the very first loyalty program was invented at a dusty bar in the Old West. Taking a liking to (or pitying) a mustachioed man who’s been at the bar all evening, the bartender pulls out the jug with a few Xs on it, pours a shot, slides it down the bar and says, “This one’s on me, pardner.” The customer, grateful, tips his hat and reckons he likes this local watering hole.
That’s the rewards program in it’s purest form. Buy in bulk, get a price break. Buy ten coffees (or sandwiches, or hotel nights), your 11th is free.
Loyalty programs are ubiquitous in just about every industry that wants your money…but what about an industry that wants your attention? As far as I can tell, there has never been a successful loyalty program in the ad-supported television industry — but for a variety of reasons, we should expect that to change. As loyalty programs get smarter, TV steps into the digital world, and binge-watching gives a whole new face to viewer loyalty (hello, Stranger Things), smart networks will be adopting some old familiar tricks to win your loyalty.
We’ve come a long way from a free drink at a bar at the end of the night. The simple concept of customer loyalty has evolved in just about every industry and every aspect of a consumer’s life. Loyalty programs now involve stratifying members’ “status,” hyper-targeting offers, improving customer experiences, easing payment friction, and a slew of other tactics that blur the lines between customer service, loyalty programs, and straight-up marketing. These efforts make sense for businesses because the cost of converting an existing customer to a loyal, repeat customer or advocate is drastically lower than the cost of bringing in a new customer.
Credit cards, airlines, hotels, restaurants, theaters, gaming apps, e-commerce sites…it’s hard to think of another industry not gaming for your repeat business. But TV is the noticeable outlier — and considering the top 25% of viewers account for 61% of view time, TV companies have a lot to gain by creating more loyal viewers. Let’s take a look at some practices the ad supported TV industry could learn from.
Points and Status
Currently used by: Airlines
The “inventors” of loyalty points systems, the airlines, offer the TV networks a couple exemplary practices. Most obviously: Encourage frequency by rewarding your most frequent customers. If you fly often enough, not only do you build up status, but you can eventually redeem points for free travel. The same could go for television viewing. Viewers could conceivably earn points for finishing a library series, or staying up-to-date on a current series, or watching on multiple devices. These points could be redeemed for ad-free episodes, or accumulated for status.
Airlines learned quickly that a customer’s perceived value of “status” can far outweigh the company’s cost of delivering that feeling. Airlines do this with priority boarding, upgrades, and lounge access. The cost is minimal, but it carries weight with weary travelers, and makes their experience better. TV companies can replicate this with exclusive access to behind-the-scenes content, or early release of trailers and other information that loyal viewers would see value in.
Targeted Offers
Currently used by: Casinos
Perhaps, nobody has put more effort and research into loyalty systems than casinos. The proliferation of gaming cards gives casinos detailed insight into the wagering behavior at the individual level, making it easy to target certain marketing efforts toward high revenue gamblers.
One practice that translates to the TV world is calculation of loss limits. Casinos can tell with a high level of certainty when a gambler, down on his or her luck, is about to walk away from the table. They capitalize on that moment by making targeted offers. Gambling credit, or free tickets to a show happen to appear at just the right time to make the gambler feel good about the day — ensuring a happy return.
In the digital landscape, cable and broadcast companies are armed with information to make the same calculation about when a viewer is likely to end their viewing session for the day. Offering an ad-free episode at that critical moment could convince them to watch just one more episode. This could be very effective at drawing viewers further into a show, turning casual viewers into loyal bingers. The cost of such an offer is low for the TV companies, but there’s potentially great up side; according to Netflix, a binge viewer of a rookie season is likely to binge subsequent seasons even faster.
Impulse Gratification
Currently used by: E-commerce
The emergence of on-demand viewing and proliferation of screens (via mobile and tablet devices) allows TV companies to start thinking like e-commerce companies, and capitalizing on impulse buying (or, in this case, viewing). And an urgent impulse is easily manufactured with a well-placed, limited-time offer.
Imagine you’re on your way home from work when you get a notification that ad-free episodes of a certain show are available…but only for the next two hours! The crucial “what to watch” decision moment can be influenced with some creative messaging and calculated urgency.
Life Integration
Currently used by: Amazon and credit cards
Perhaps you wouldn’t consider your Amazon Prime membership to be a loyalty program, but they are certainly employing a loyalty tactic that credit cards have been using for years: they are attempting to integrate into as many touch points of your life as possible. AMEX’s Concierge can set up your lunch meetings, Amazon’s Alexa can turn off your lights and lock up your house…services far outside the core business of a credit card company and an online sock store.
Television companies might be too late to the game to become leaders in this strategy, but they can certainly take advantage of the progress made by the credit card companies. I’d give serious thought to signing up for a new credit card if one of its perks was ad-free content from networks partnered with that card.
HOW DO WE GET THERE?
The TV and advertising industries need to understand that their viewers’ attention is the currency they’re trading on, and in turn, is their customers’ form of payment. With that understanding, ad load becomes a bargaining chip that can be adjusted to support these loyalty structures.
Because of subscription services like Netflix, Hulu Ad-Free, HBO, and Amazon, users are becoming increasingly accustomed to ad-free viewing. In response, many of the TV companies have been scrambling to find ways to lighten their own ad loads without taking a financial hit. But their responses so far have been too cautious; they make small tweaks to the commercial break pattern and painstakingly measure effects on viewership. They need to just make the exchange more explicit to the user. Watch more, see fewer ads.
And let’s stop splitting hairs. Vague promises like “limited commercial interruptions” or “fewer ads” are intangible, and don’t hold a candle to the pleasure of watching an episode, start-to-finish without having to suffer a single interruption.
Netflix and Hulu Ad-Free have created a market for interruption-free viewing. But right now, the only way to get that experience is to hand over money every month. Ad-supported TV can start competing with this user experience if they start asking themselves: what is an ad-free episode worth? (An email address? A new viewer hooked on a show? Credit Card information?)
As consumers we should be happy that the value of our attention is becoming more transparent. And, increasingly, consumers’ are able to directly participate in the sale of their attention. It’s only a matter of time (and increased access to data) until we start seeing these types of “offers” being made regularly in the TV environment. But keep in mind that they are not just friendly gifts…like the free drink from a bartender, it’s also an attempt to influence your behavior.
