Verizon Rewards Program Draws Customer Ire, Putting Mobile Data Sharing At Risk

VerizonSmartRewardsThe $4.4 billion check that Verizon wrote to AOL is evidence enough of its commitment to ad tech. But Verizon appears to be less committed to providing its users with an intelligible loyalty program – and that could prove to be the fly in the ointment for its lofty consumer data plans.

Many Verizon customers perceive that the company's Smart Rewards loyalty program – which, it should be noted, requires users opt in to be tracked for advertising purposes through Verizon Selects – leaves much to be desired. As one Redditor commented in September, “It mostly exists to con you into buying things from partners at prices that aren’t particularly competitive.”

Verizon has a compelling opportunity with AOL, but bad user experience doesn’t bode well for the integration.

When Verizon first snapped up AOL in May – and then AOL duly bought mobile ad platform Millennial Media a few months later – it became clear that the carrier was getting serious about cross-device with a distinctly deterministic flavor.

Five months later, in October, Verizon updated its privacy policy to say that AOL’s data from the thousands of websites, apps and other online providers it partners with would be blended with Verizon’s user profile data, including postal address, email address, device type and info related to a subscriber’s use of Verizon’s own products. Much of that AOL data came from companies that have partnered with AOL’s advertising services, including ONE by AOL and Advertising.com.

The new ad program also taps Apple and Google ad IDs, AOL browser cookies and Verizon’s own unique identifier header. (Remember the zombie cookie saga?)

It’s an aggressive move into digital ad monetization, a space typically populated by Facebook, Google, et al, and the opportunity for advertisers is clear. As Gartner research director Martin Kihn put it in a previous interview with AdExchanger, Verizon is creating “a mini-Facebook killer for mobile sales.”

For its part, Verizon is framing its intentions, as least to consumers, as a help-us-help-you sort of play. An email received by some Verizon subscribers in late October pointed to an explainer page claiming that the combination of the Verizon/AOL data sets “will help make marketing you see more personalized and useful to you across the devices and products you use.”

But one has to wonder how Verizon intends to accomplish this goal in light of some other awkward attempts at customer outreach and relationship marketing.

In late August, an AdExchanger staffer received a push notification from Verizon on her mobile device encouraging her to join the Selects program. There were only two choices, “Join” and “Not now.”

The way Verizon handles Smart Rewards is another classic example.

Users looking to join Verizon’s loyalty program are required to opt in to tracking in order to participate, as well as tick the “agree” box on a 5,600-plus word T&C. (For a little perspective, that’s more than double the length of Edgar Allen Poe’s short story, “The Tell-Tale Heart,” and a bit more than 1,000 words longer than the US Constitution.)

It’s only possible to browse the potential rewards after having signed up. As one commenter pointed out on a Verizon message board, “You can’t look over the deals or see anything else until you actually join the program. What does that tell you?”

All users start out with at least 10,000 points when they join, with the chance to win additional points for doing fairly easy, run-of-the-mill stuff like paying bills, opting for electronic payments or upgrading devices. For example, participants can get 10 points for every dollar spent.

Although points can’t be applied to a phone bill, rewards run the gamut from the chance to enter sweepstakes to discounts off Verizon products, meals at local restaurants, travel and select merchandise.

Users can also put their points toward gift cards – say, 1,000 points in exchange for $10 off a $100 Denny’s gift card, meaning the customer is still responsible for shell out $90 – or enter live auctions to win gift cards or merchandise.

bloggif_563b9daa0a58dCommenters on social commerce site Slickdeals reserved most of their ire for those auctions, which don’t seem to pass the sniff test. “It is literally impossible to win an auction,” one user complained. “I’ve spent a total of 10 hours over the last month trying to win one of the $100 gift card auctions, and I’ve FAILED every time.”

Various contributors in online threads suspect that the auctions are borderline unwinnable by humans, with one on Slickdeals wondering if there are “bots that drive up the bids.” One Redditor admitted as much: “I won two $100 Verizon gift cards off the auctions and used them to buy my iPhone 6 lasts [sic] year. Had to program an auto betting program to actually win though.”

Manny Puentes, CTO at video ad platform Altitude Digital, is willing to forgive clumsiness in deference to the underlying idea. Rewarding users for sharing data is a “model that will continue to gain momentum,” he said, noting that “any first mover with new technology is going to have bumps along the way.”

“It’s not surprising that there are still pieces of the puzzle that need to be worked out,” Puentes said. “I don’t see any risks other than it’s hard to pull back once you’ve started rewarding consumers for their data assets.”

Which could get tricky from a regulatory point of view if the Federal Trade Commission gets involved. Although the FTC has made no major moves to corral the loyalty space other than to bring actions against several companies involved in the deceptive marketing of gift cards, the FTC is always on the alert for unfair practices.

Verizon aside, consumers aren’t going to jump through hoops to take advantage of a loyalty program if they don’t perceive the value or if they’re “forced to jump through hoops every single time they try to use it,” said Zach Goldstein, CEO and founder of customer retention and loyalty startup Thanx.

In fact, 58% of loyalty memberships in the US are inactive, according to research from Colloquy. There’s at least one obvious reason for that, Goldstein said.

“Complex loyalty programs often struggle from a consumer experience perspective, whether that’s due to an obtuse points system that makes it hard to understand how much a point is worth or because the program involves raffles and auctions or the random selection of winners,” Goldstein said. “In a successful program, the rewards are achievable, attainable and at least perceived to be of high value. But if a user can’t figure out what’s going on, it’s demotivating, which means fewer people sign up originally and fewer people continue to engage over time.”

What then of Smart Rewards?

Another Redditor summed up the general attitude in a very Reddit sort of way: “110,000 points for a $25 Verizon gift card. If your [sic] going to rape me for my search history or whatever Verizon, at least let me get some stuff for it.”

It’s a moment of truth for Verizon as far as its mobile data set goes. If the user experience isn’t there, people will stop opting in to allow themselves to be shown targeted advertising. And then, perhaps, the game is over before it begins.

Verizon did not respond to a request for comment.

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2 Comments

  1. Jack Smith

    Sure, Verizon is bad at consumer software. But with the recent privacy policy change, using data is no longer an opt-in program, correct? Or did I misunderstand?

    We'll see how long it takes, though, before T-Mobile starts including "we're not creepy" in its marketing, the way Tim Cook sometimes speaks of Google and Facebook.

    Reply
  2. Hi Allison, I’d thought you might find this youtube video interesting regarding the Verizon rewards program. I agree the program is quite ridiculous but this lady has a worthwhile suggestion to donate a decade’s worth of points to a children’s hospital like St. Judes.

    https://www.youtube.com/watch?v=3AVFuyhPbSE

    Reply

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