Stutts, who focuses on BCG’s consumer, marketing and sales practice areas, shared his experience working on a project with a top hotel company in his presentation, “Getting Out of the Arms Race: Branding a Loyalty Program.”
While branding has traditionally been ruled by emotion and “what feels right,” Stutts says that consulting in this area is beginning to take a much more data- driven approach. “What used to be marketers sitting in a room, squeezing toys, throwing out ideas and brainstorming has now become a very quantitative process that we really pioneered,” said Stutts. “We do an extremely quantitative version of branding at BCG.”
Stutts and his team were tasked with finding a way to build a long-term strategic advantage with the hotel company’s loyalty program. At the beginning of the project, the company was locked in an “arm’s race” with competitors who all offered the same basic rewards, such as free nights or free breakfasts. It appeared to managers that the only way to differentiate a program would be to offer more benefits and freebies, but this escalation in rewards could only go on so long before it would negatively affect profits.
When the BCG team was called in, it realized that in order to set the client’s program apart from others, it would need to tap into consumers’ emotional connection with the loyalty program, something no competitor had ever tried before. “We knew we had to get to something beyond this arms race of more and more rewards,” said Stutts. “We had to get to something broader, longer term and more meaningful.”
With the help of extensive focus groups and surveys, Stutts identified why customers like loyalty programs on an emotional level, translated these emotions into concrete attributes and worked to incorporate these into the program. The research revealed six emotional spaces, which were subjected to further quantitative analysis to identify the best business opportunities.
Eventually, BCG determined that “scoring a good deal” and “hard work pays off” would be the most effective emotional appeals for the client. Stutts’ team then worked with a creative agency to turn its data into a branding campaign with a consistent look and feel across all touch points, from the program enrollment brochures to the website to advertisements. “Consumers went from a point where all they saw were points and miles to something like, ‘The whole point of all this travel is that I can share these moments with my family by using loyalty rewards.’”
But the research doesn’t end with strategy development. Stutts said the consulting field is becoming much more focused on implementation, rather than just identifying strategies. BCG carried about a market test of its recommendations in 40 hotels across the country, and the results were impressive. The new branding strategy has more than doubled program enrollment, and Stutts credits solid research and data analysis with its success.
For aspiring consultants, he emphasized the importance of being familiar with the industry’s leading statistical analysis tools, such as SPSS. Students at UNC Kenan-Flagler are well-positioned to handle this shift toward big data. Several of the school’s courses, such as Marketing Analysis and Decision Making, use SPSS, Management by the Numbers and current case studies teach students how to use data analysis to guide and support marketing decisions.
“We want associates, consultants, MBAs and undergrads to really understand data and how to make the data talk,” said Stutts. “Big data is what it’s all about now.”