Loyalty Pays for Hawaiian Subs

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Whether you're still packing a school lunch or waiting
for a Social Security check, Oceanic Cablevision in Oahu, Hawaii, has a reward for you.

The operator, a Time Warner Cable system, fights erosion to
competitors with one of the most extensive loyalty programs around. For several years, it
has had two clubs for children -- one for younger kids and one for teens -- in partnership
with the Coalition for a Drug-Free Hawaii.

For the asking, a child can join the "Keiki"
(native Hawaiian for "child") or "MyTV" club and get benefits such as
free tickets to Hawaii Pacific University home games or discounts on Hawaiian shirts.

But this past November, the operator drastically upped the
ante, expanding its club program to adults who had been with the system for six months or
longer.

That move increased the company's investment in
retention to hundreds of thousands of dollars, because 200,000 customers automatically
became eligible for "Kupa'a" (loyalty) club cards.

The cards themselves represent quite an investment because
they are just like credit cards, with bar codes and mag-stripe technology. Also, Time
Warner delivered them in splashy, oversized envelopes so that people would actually open
them and retain the cards.

The club takes its lead from grocery-store loyalty clubs.
Instead of entitling bearers to an occasional free pay-per-view movie, it gives members
discounts to things that are in short supply in the Islands: high-priced staples such as
gasoline, bread and milk.

"Living in Hawaii is like a country club: You play in
paradise, but you pay your dues at the supermarket," explained Kit Beuret, director
of public affairs for the system.

Because of this, the operator decided to offer
real-life-style benefits to its card.

Oahu is a mature market, and Oceanic has 85 percent
penetration. But it can't afford to ignore the competition from the start-up GTE
Americast wireless-cable system or from satellite dishes.

"People don't have time to clip coupons, but they
have slipped this card in their wallets for when they go to the store," Beuret said.

The operator solicited existing commercial advertisers to
support the program.

These include: Aloha Petroleum, which offers four to six
cents off a gallon of gas on specified days; Star Markets, which changes its discount on a
selected staple every month; Aloha Airlines, which cuts the price of interisland travel;
and Zippy's, a popular restaurant chain, where holders can get a free order of rice
topped with chili.

"It's a Hawaii thing," Beuret said of the
latter concoction.

This doesn't mean that the card is used just for
basics, though: The system recently cosponsored a concert by teen heartthrobs 'N
Sync, and youths were admitted free-of-charge with their Keiki and MyTV cards. "We
packed the place," he said.

Advertisers have offered good anecdotal feedback on usage,
which can be monitored with the coding on the card. The operator said customer-service
representatives at the system get calls from customers, too -- mostly from unqualified
subscribers wondering how to get cards.

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