Originally published in Box Office magazine and pro.boxoffice.com, 'Loyalty Counts: Movio Execs on How to Get the Most Out of Your Loyalty Program'; Los Angeles, 19 December 2016.

Why are loyalty programs so important for today’s exhibition circuits?

Matthew Liebmann: Because to be successful these days, an exhibitor must understand their guests at least as well as they know how to put a picture on a screen. Nothing enables an exhibitor to know and serve their guests better than the insights gained from a well-designed loyalty program.

Sarah Lewthwaite: I think that a customer database (aka a loyalty strategy) has always been important to our industry. That being said, I believe that it’s in recent years that the combination of improved database technologies plus the need for cinema chains to strategize and reassess their business models in the face of new and differing forms of competition has resulted in analytics being put more in the forefront. It has never been more important to our sector for cinema chains to both sustain their core theatrical business, while also developing new audiences and business models in order to grow.

How are mobile apps redefining the loyalty program experience?

ML: “Mobile” equals “ubiquity.” Virtually everyone has a smartphone within reach at all times—mobile phone penetration is currently at 50 percent globally, and predicted to grow to 60 percent by 2020. Loyalty on mobile devices facilitates easier sign-up, eliminates the need to remember plastic cards, and is a highly effective communication and promotional channel.

SL: One of the biggest barriers for traditional loyalty programs has been convincing a consumer to keep another loyalty card in their wallet. This is especially difficult in the cinema sector as, unlike drug stores and grocery stores where consumers may visit weekly, the average moviegoer only goes to the cinema a handful of times a year. To keep another card in your wallet when you aren’t using it regularly can be a challenge, and therefore having a digital version of a loyalty card available on an app can make things easier—no additional wallet space required! An app also provides a new communication channel for cinemas via push notifications that can be personalized and targeted to the user.

Without meaning to sound like a high school guidance counselor, are loyalty programs misunderstood by some companies to the extent that their full potential is never achieved?

ML: You couldn’t be more right! If a loyalty program isn’t laser focused on driving incremental returns, then I would question why it exists. A loyalty program is a series of considered exchanges. The exhibitor offers incentives at appropriate times to motivate their members’ behavior: to encourage members to choose the exhibitor over its competitors; to visit more frequently; and to spend more each visit. We often see exhibitors “giving away the farm” and asking nothing from members in return, and this is a recipe for disaster.

SL: I think even the term ‘loyalty program” can be misleading in describing what the program is, which is a means for companies to capture data on their customers. I much prefer to look at this as a data capture strategy. What you are essentially “giving away” to consumers is the enticement to get them to provide data to you. Loyalty programs are not silver bullet solutions that are going to transform companies overnight, and this is where a lot of organizations go wrong. Sometimes companies put a lot of effort into launching a loyalty program, turn it on and expect it to start delivering results immediately. A loyalty program needs to be a long-term commitment and investment, with proper management, nurturing and refinements in order to ensure it delivers on its full potential.

There has been so much investment around exhibition circuits on the cinema-going experience; how does a loyalty program fit into that equation?

ML: The cinema experience is comprised of the movie; the cinema facilities and the service offered to guests. A well-designed loyalty program provides insights into what guests want and how their behavior can be shaped. For this reason, it shouldn’t just be the realm of the marketing team; every department should access program insights to enhance the experience. For example, operations can tap into the program to understand guest satisfaction; concessions can use it to drive incremental F&B expenditure; film programming can identify remaining guests for a movie before it comes off screens; and sales can use it to drive events and gift cards.

SL: Loyalty program can enable a cinema chain to better understand the market for a particular experience (be it a PLF screen or VIP auditorium) and can enable them to target market these experiences more effectively. The data generated through a loyalty program can help provide the insights necessary to evaluate new concepts, and to help plan the growth of successful concepts by understanding the target market better.

What sort of incentives or rewards have you found to work particularly well with consumers?

ML: It really depends on what you’re trying to achieve at each stage of the loyalty lifecycle. It’s imperative to get complete and quality member data at sign-up, and so something meaningful should be offered upfront (and withheld until that data is provided). Points are predictable – the member knows if they do X, they earn Y—so this helps drive everyday engagement. Finally, targeted special offers based on a member’s profile and behavior not only motivate incremental visits and spend, but also make members advocates, encouraging them to tell their friends and family about the program.

SL: Free upgrades to promote a trial of a new/premium experience have proved to be successful for many of our customers. However, I also believe that a well-tailored recommendation for a film delivers value to customers in and of itself. I don’t believe that an offer or discount is always necessary.

What are some of the biggest mistakes that exhibitors should avoid in establishing a successful loyalty program?

ML: The biggest mistake is to not think of a loyalty program as profit generating from the outset. This objective should drive program design, team commitment, the offers extended, and ongoing success measures. While this may sound mercenary, remember that the only way for a loyalty program to generate sustainable profit over time is if the program offers members genuine benefits that they understand and value.

SL: Not putting the focus on this program after launch and having it simply run as a marketing program is a big mistake, as loyalty should be interwoven into the fabric of a company. Another would be not paying attention to how members are responding to your campaigns and communications. Measurement is key and will allow cinema chains to refine what works and what doesn’t work so they can constantly improve. I’ve also noticed some exhibitors don’t use the data to segment marketing and communications accordingly, and instead choose to rely on a lot of mass marketing. Personalization should be paramount when executing a loyalty program.

Having a loyalty program is only step one; how can exhibitors make sure they hit membership goals and keep that number growing?

ML: A loyalty program will only succeed if the entire business commits to it. The tone is set from the top: the CEO and senior management must communicate that it is an essential part of the business at every opportunity. Theater managers must recognize that driving and serving membership isn’t just a seasonal promotion, but fundamental to the cinema’s operating model. Front-line team members must understand the program, advocate it to guests and ask for membership in every single transaction. Ultimately, the only way to drive growth is to design and operate a program that satisfies both members and the exhibitor.

SL: The focus should be on retaining members while balancing that with a consistent stream of new members. Developing an effective member engagement strategy will help cinemas to retain their current member base. To drive new membership, there should be a consistent plan that integrates the program and its benefits at every customer touchpoint—that is, box office, websites, mobile, in-auditorium etc., etc.—and this marketing should be kept fresh. Acquisition messaging should be tested to ensure that the key benefits are indeed resonating with potential members, and if they’re not, what new program elements can be pulled in that do resonate.

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