Yesterday, we wrote about the Facebook IPO and how the offering was putting relationships at the center of the business world. The implications for marketers and how social loyalty evolves are significant.

The “Like” has become the “identifying word of an entire generation” and big brands are shifting their attitudes and budgets from traditional media to the web as they recognize that Facebook and Google are the platforms of the future. Just this week, Procter & Gamble announced they are trimming their annual advertising budget in favor of these more efficient platforms.

Evidence abounds in every corner that sharing can be a powerful tool for marketers to leverage. A Fleishman-Hillard study reported that Millennial women are ideal brand advocates as 46% access reviews written by other users, and one third are willing to recommend a product online following a positive experience with the brand.

As a dedicated loyalty marketer, I fully side with Zuckerberg on the importance of relationships. I also wince over the perils of sharing everything, and fret that technology development is outpacing our human capacity to cope with and adapt to new social tools. As much as we’ve read stories of faux pas committed by Facebook and Twitter users, I really believe that vast numbers of Millennials still do not grasp the long term implications of non-stop sharing.

The Merriam-Webster dictionary defines relationship as “the state of being related or interrelated”.  For most of us, this definition implies relationships are structured in terms of pairs, i.e. between husband and wife, brother and sister, friend and friend (BFF’s), or consumer and company. Sure, we all have relationships with groups (school, church, club) but those are not typically as transparent and personal as those that are paired. Most humans are wired to connect on an individual level,  and as social networks redefine a relationship from “one to one” to “one to many”, it may delight some while making others wholly uncomfortable.

Even the most enthusiastic and dedicated Facebook users register some concern that the reality of their lives is shifting from the natural to the ether. The Facebook employee writing a blog post in the Wall Street Journal this week quoted a friend who shared “I don’t want to be the people who, rather than living their lives and sharing their lives on Facebook, their lives are Facebook.”

As time goes on, the enthusiastic generation of Millennials will gradually expire and I expect there will one day be a Facebook Obituary section, with a person’s page memorialized and a “last update” made by a friend or family member. Instead of signing the guest book at the local funeral parlor, we’ll just click “Like” via the kiosk situated next to the casket.

In other words, life will continue to change, probably in ways we cannot imagine. Taking Facebook public is the just the beginning. To stay ahead in the marketing game, you had better keep your imagination alive and your mitochondria healthy. You’re going to need every one of them to stay on top of it all.

The past few years we’ve seen somewhat of Cambrian explosion of products and services designed to help consumers burn their loyalty rewards.  Colloquy has studied the issue and found that around 1/3^rd of all earned loyalty awards go unredeemed.  Clearly there is a market for helping consumers get the most from their loyalty earnings.

Continuing our coverage of innovations in the areas of customer engagement and liability management, we interviewed Paul Hebert – Sr. VP Marketing and Skip Kitchen – Sr. VP Business Development, to learn more about LoyaltyShares LLC.

Launched in October after two years of work, the New York City based company, enables loyalty program participants to redeem their loyalty earnings for shares of stock in the sponsoring company.  If you’re a Delta frequent flyer with millions of miles – buy stock instead of stockings.  If you’re a member of AMEX rewards and just can’t stomach another trip – grab a few shares of AMEX.

Based on experience designing and operating a similar program for a regional hotel chain, LoyaltyShares LLC assembled the technical and financial resources needed to create an interface, currently called a Loyalty Equity Acquisition Program (LEAP^TM), connecting the loyalty program to a direct stock purchase plan. This allows members of the loyalty program to convert their earnings in the program – whether miles or points or whatever – into shares of company stock.  The redemption event can take place monthly and the conversion rate is set by the sponsor. Consumers pay a small annual fee with their points to have access to the LEAP^TM service and they can then execute a trade each month of the year for however many shares they wish to purchase.

What is interesting here is that not only do consumers win by getting a rather unique redemption option – the sponsor also gets a win by having what is a liability – their reserve for unredeemed points – converted into equity – stock in their company.   While any redemption would reduce the company’s liability, this option enhances its equity as well and would seem to be have a positive impact on a company balance sheet.

The partners in this effort also believe – and some research does back them up on it – that customers who own stock in a company are more loyal and likely to recommend the product or service.  It does make sense that investors/owners would want their stock to increase in value and therefore would talk it up with their social networks – both virtual and real.  Points don’t grow in value if they sit in an account waiting for redemption – but stock can increase in value.

Buyer beware though – stocks can also go down in value.  When consumers redeem for stock in a company they run the risk of losing some of the value they had accumulated in points or miles. We’ll recognize that risk but also say that it’s manageable compared to allowing points to go unredeemed and “break”.

In my conversations with Paul Hebert, I learned that LoyaltyShares has a patent pending on the application and have received great feedback from their early discussions with loyalty sponsors and industry insiders.  Though most sponsors may not be able to connect its program members with shareholders, the company believes an opportunity exists to capitalize on a defined group of shareholders who are also members of their loyalty program, opening up new avenues for customer engagement.

My Take

1. With liability for unredeemed points on the increase and consumers looking under every rock for a reward option that creates excitement and value, LoyaltyShares has potential.
2. Converting points to stock invokes math similar to cash back – one of the most traditionally desired redemption options – yet this option has the potential to increase a customer’s loyalty value over time.
3. On an emotional level, I have to believe that consumers who are stockholders will be more inclined to become brand advocates in order to protect their investment.

What do you think?

1. Will offering equity in a company change the way consumers define customer loyalty?
2. Do you think consumers will take the risk of redeeming for stock?  Could people see this as a way to recap loses in 401K’s with “free money”?
3. Will Social Giving and Ownership Loyalty become two pillars of the changing loyalty landscape in 2012?

Either way – in my mind the redemption space just got a little more interesting.

There’s a fascinating article titled “The Dawn of the Relationship Era in Marketing” that recently appeared in AdAge magazine. It’s written by David Rogers and Bob Garfield, the latter the same guy who caused a stir a few years ago with the essay “The Chaos Scenario” which (semi-correctly) predicted “the end of advertising as we know it”.

This piece isn’t quite so controversial, but it does point out that the role of marketing in the selling equation is changing. The authors posit that we’re witnessing the end of  “the Consumer Era” and are now moving into “the Relationship Era”.

The Relationship Era is based around the idea that companies that succeed in the future will do so because they’ve made some sort of human connection with their customer base. The belief is that in the Relationship Era, the big winners will be companies that people trust because they have “solid core values” and “transparent and honest practices“.

These companies will spend little on advertising—because they won’t need it. They’ve made a personal connection with a core group of customers who trust them implicitly, because they’ve backed up their core values with actions. They can then rely on these loyal customers to spread the word about their products and services and attract new customers. It almost seems the logical result that comes from a well executed corporate social responsibility policy.

The authors believe these brand-fan customers will: “…share your links and retweet you on Twitter and post a photo of themselves with your product on Facebook and like you on Facebook and generate all these network conversations, which go back to the top of the funnel and influence other customers in your network at their own stage of awareness, consideration, preference or action.”

So how do you get to be one of these beloved companies who people are tweeting and posting about? It starts with a purpose according to Rogers and Garfield. “You have to explain to all comers why you’re in business.” Among the companies identified as successfully “explaining” themselves and their values are Apple, Whole Foods and Trader Joe’s.

One prime example that’s cited is outdoors outfitter Patagonia who for years has had a purpose that resonates with its customers: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis. The company then backs up this mantra with real-world actions, donating 1% of its gross sales to environmental causes, promoting environmental sustainability in every aspect of its operations and providing progressive workplace policies like paternity leave and paid sabbaticals.

Another company identified as a having authentic purpose: Krispy Kreme. After a rough start to the decade, in 2009 a new management team went searching for the company’s raison d’etre and came up with: “Touching and enhancing people’s lives through the joy that is Krispy Kreme. Management then “decreed that the joy ethic inform every interaction at every level of the business.”

My take: I can buy into the Relationship Era—but only to a point.

It’s hard to argue with companies like Trader Joe’s and Patagonia, that have carved out their own unique niche in the marketplace with little to no advertising, but lots of positive word-of-mouth and social networking buzz. After all, what’s not to like about free advertising? But the fact is, these kind of companies are few and far between.

Put under a microscope, I’d say the majority of US companies would be unable to pass the “authenticity” sniff test. Even successful companies often aren’t nimble or visionary enough to coalesce around a single purpose and execute it in the marketplace. It’s just not in their DNA. For instance, I wonder if every Krispy Kreme franchise has really been able to add “the joy ethic” to every business transaction.

The good news: companies that lack a specific purpose their customers can rally around, have other ways to grow their business and increase brand loyalty. This includes doing all they can to improve the customer experience from pre-sale to post-sale. It also means enhancing customer engagement, so that customers are communicated with in personal, relevant ways across a variety of touch points.

What do you think—is the Relationship Era upon us?

In a previous post, I mentioned several areas of innovation that will impact Loyalty Marketing in 2012. There is never room to offer a truly comprehensive list and not everything cited will necessarily become the equivalent of a marketer’s lottery ticket.

Realizing the abundance of new products and strategies introduced to market during the latter part of 2011, I plan to share a few more interesting things to watch over this first month of the new year.

As we all know, Groupon took the marketing world by storm last year, reinforcing an already dangerous instant gratification mindset among consumers. Reaction to the success of Groupon has been varied, with some marketers bemoaning the death of consumer loyalty as people seemed unable to focus on anything but 50% off a deal that needed to be purchased today.

Others soon pointed out the weakness in the Groupon model as it represented a consummate marketing “hammer”, i.e. a tool designed for one job and one job only. As a merchant or retailer, if you’re interested in acquiring new customers, Groupon seemed a great tool. Yes, you needed to protect yourself from the potential hazards of the Groupon model itself, but in our short term minded world, Groupon was seemingly too tempting for merchants to pass up.

Groupon has been moving to quiet its critics and recently introduced Groupon Rewards. On the surface, Groupon seeks to stimulate not just acquisition but repeat purchase and “loyal” customers, but as a writer at Colloquy smartly stated, “If I’m digesting this news right, this would be the equivalent of retail-store window signs announcing, “Everything 50% off in the store–spend over $100 and we’ll give you 80% off on your next purchase!”. The writer concluded by saying: “The concept seems to translate to simply an even bigger acquisition discount.”

In the midst of all the buzz over daily deals in late 2011, Affinity Solutions launched Spot ON Deals, a product positioned to “do daily deals right”.  In the company’s press release,  Jonathan Silver, President and CEO said; “Today’s daily deals programs more often than not attract bargain hunters; they don’t encourage repeat business, and they don’t allow merchants to meaningfully track results.”

To address these issues, Affinity says it will enable participating merchants to “target the right customer with the right offer at the right time, using data-driven insights to hone in on key segment and consumer spending trends”. Affinity also addresses daily deal measurement offering merchants the ability to track the effectiveness of their offers, “while deploying ‘follow-on’ offers to drive repeat purchases, loyalty and customer lifetime value.”

Today’s Take Away

There is and will continue to be heavy competition the daily deal space. The real prize is to move from a singular focus on daily deals and incorporate the tactic into a more comprehensive customer strategy that will benefit brands, their merchant partners, and consumers over the longer term.

It will be interesting to watch and see if the originators of the daily deal (Groupon, Living Social and others) will be able to bridge their product into the wider loyalty marketing space, or whether Affinity Solutions and other leaders from the loyalty marketing industry itself will be better suited to take the daily deal to the next level.

I was privileged to hear Seth Godin speak this week. Let’s face it, there are many high priced keynote speakers around, and I have listened to several who give an entertaining 45 minute talk, generate a few laughs, but leave me with nothing to take back to the office.

Seth Godin was not one of these. His one hour talk was awarded by hearty and sincere applause from the audience, and I had to drop my pen while taking notes to join in the appreciative celebration.

I have read most of Seth’s books and have admired his ability to capture a short list of important concepts and communicate them in succinct and readable fashion. While introducing Seth, the MC of this event reminded us that typing “Seth” into the search field of any browser will lead you right to Seth Godin. Try it. That is as impressive as any other SEO result I have seen, underscoring his impact on the marketing industry.

As relates to Loyalty Marketing, Seth hit several hot buttons for me. Today there are a variety of descriptive terms used by suppliers and consultants in the business talking about the “Art and Science” of Loyalty Marketing, treating it as “Alchemy”, or otherwise expressing that customer loyalty should be generated through more than rote design. I agree there is an interpretive side to strategy development that in some cases can be equally important as quantitative analysis.

The trouble is, as Loyalty Marketing has become a widely applied strategy to achieve financial results for big brands, the industry has become populated a mile wide and an inch thick with customer loyalty “experts”. Large commercial agencies dismiss loyalty as just one more service that can be provided to a client under an umbrella retainer agreement, and there are still too many cookie-cutter solutions in the market which focus on cost efficiency and ignore customer engagement and results.

Seth Godin challenged the group yesterday, contending that, “competence is no longer important”. He warned that “if you can write it down, a customer can find it cheaper” and suggested that as we allow our creative trade to become more systematized, we risk becoming evaluated on price and delivery, rather than on the greater value we can deliver to our clients.

Seth urged the group to seek to “solve interesting problems” and to strive to “do work that matters”. This really is our calling as loyalty marketers, and the complex digital world we live in will reward this perspective more each day.

There are some interesting and challenging problems to be solved indeed, and the people which find the answers and deliver practical solutions to clients will forge a new wave of innovation in our business.

1. Who will connect the dots to make the concept of Social Loyalty a reality that can be executed and measured by brands?
2. Who will transform retail bank customer marketing from its continuing product focus to a broader customer relationship model that is practical and affordable to operate?
3. Who will turn the key to unlock coalition style loyalty marketing in the United States?
4. Who will find the artful way to engage affluent consumer groups through loyalty programs? To reach those that “have everything they need”, we have to break the mold.

Seth concluded by making the point that we have to be willing to take some chances, to stop being afraid to trial new approaches, and to create the path for brands to follow.

People welcome and embrace leadership. Often there just isn’t enough to go around. Today, there is a big opportunity for a new position of leadership to be established in Loyalty Marketing. I’ve got my machete in hand and am ready to carve the new path. How about you?

Amid the overwhelming flow of information in our digital world, there are a few keepers. Chris Brogan is one of them. I don’t know him personally, don’t have any affiliate relationship with him, and am not trying to get him to follow me on Twitter. I just like to read his stuff.

Chris wrote about his approach to New Year’s resolutions in this post, instead choosing 3 words that would help him to focus on what’s most important for the year ahead. I like the idea and am still trying to reduce my personal list of keywords to single digits. Meanwhile, I found it easier to create a 3 word list for Loyalty Marketing in 2012 and wanted to share it for your consumption and discussion.

Let me know what your 3 words would be for this year and why you chose them. I’ve started a discussion on our Customer Strategy Network Facebook page and in a few LinkedIn groups where you can participate. If you prefer, just leave comments here on Loyalty Truth.

Data

Loyalty marketers have been collecting customer data since the dawn of the business. To a great extent, that data has been under-utilized and this shortcoming threatens the trusted relationships we have with our customers. Consumer 2.0 is well aware that the portfolio of transaction and personal data that defines self is highly valuable to corporate America. Though we’ve been talking about increased leveraging of data as one of the biggest opportunities in Loyalty Marketing, 2012 might be the year that it happens.

Selecting Data as one of my 3 words for 2012 puts me in pretty strong company as I recently listened to Rupert Duchesne, Chairman of Aimia, speak about Data being the “New Oil”. And, just last week, I read that Foursquare was making public its intent to put its data to work as a tool for growing its business in 2012.

Mobile

The mobile handset has been predicted by many to become the central platform for social shopping and payments. The Google Wallet was announced last year and payment/loyalty plays including Square, Dwolla, and LevelUP seek to change consumer behavior and set a new mold for how we shop and pay.

Banks are pledging to make better use of mobile applications to bring banking products closer to the customer, in the process redefining how we view the retail banking customer experience. Groupon has responded to criticism that it is impotent beyond stimulating customer acquisition and trial and has introduced Groupon Rewards as well as partnering with Foursquare to find synergy in location based marketing and the daily deal.

The convergence of loyalty, payments, and the mobile handset will continue at a faster pace during 2012.

Social

We invested significant time gathering information and creating position papers on Social Loyalty, Social CRM, and Social Shopping during 2011. Clients as well as conference delegates wanted to absorb as much as they could on these topics and the buzz made us question if everything involving “loyalty” and “social” might dissolve away as just the latest marketing fad.

It’s not going to happen. In fact, 2012 will be the year when many brands put their PowerPoint presentations on the shelf and move to implement more social channels into their customer strategies. Consumer 2.0 is making purchase decisions differently than before and will be delighted by elegant ways to locate and evaluate local shopping offers via their mobile device. The social aspect comes in the form of interactions via social shopping networks like Zavee.com or by engagement with game-fueled loyalty programs where referral and recommendations lead visibly to purchase.

Three words that will define Loyalty Marketing in 2012: Data, Mobile and Social. I’m sure you can make an argument for others.

Let’s hear it.

2011 began as a year with loads of promise for Loyalty Marketing. Top of mind for most program managers was the need to add value for members while keeping costs under control, and to better manage the financial liability associated with unredeemed points and miles.

Purchase behaviors exhibited by the Millennial generation were being adopted by broader segments of the population, and early in the year we estimated Consumer 2.0 to represent about half the US population, or 150 Million people.

With the old school orientation of most loyalty marketing strategists, cracking the code of Social Loyalty to engage, entertain and retain the business of Consumer 2.0 was one of the most intimidating challenges faced by the industry over the past 10 years.

So how did the industry fare in 2011 and what’s ahead for 2012?

On the liability management front, the year started out with more rumors floating about than during an American Idol contest. Solutions designed to unify consumer loyalty wallets and create uber currencies, some of which could be redeemed in real time point of sale transactions, as well as those promising unprecedented levels of consumer targeting via internet banking and credit card transactions, were receiving lots of attention. While we still wait to hear more from Free Monee and Swift Exchange, Cardlytics took a big step ahead by closing a $33 Million capital investment from Groupe Aeroplan.

Two highly viable solutions which loyalty marketers should consider not only as liability burn solutions, but as means to to add a new wrinkle to the value proposition are KULA Causes and LoyaltyShares. KULA Causes, which launched in fall 2011, introduced a new concept of Cause Related Loyalty marketing. The “currency of giving” enables loyalty program members to convert miles and points into donations to any of over 2 Million charities around the world. This is a concept which triggers consumer emotions and allows brands to heighten their quotient of corporate social responsibility in a financially efficient manner. LoyaltyShares is equally innovative, allowing loyalty program members to convert miles or points into shares of stock in the sponsoring brand. Converting liabilities into assets is a magic trick that any financially savvy consumer should like.

PointTunes.com and The First Club each introduced solutions that change the way digital content can be obtained by consumers through a rewards program. Improved customer experience and lower costs for program operators are key advantages.

Social Shopping became a reality as Zavee.com and ThanksAgain expanded their respective footprints and delighted consumers in their chosen market segments. Zavee has grown to boast over 500 brick and mortar merchants in their network across South Florida, while Thanks Again penetrated the airport frontier seeking to become a loyalty currency that travelers will aspire to collect before they fly.

“Gamification” took a big step forward during 2011 as both Badgeville and Bunchball proved that “gamification is not a fad”. Watch for much more in this space as game theory moves from a solution designed stimulate consumer engagement to one that can change consumer behavior across a full value chain.

As consumer research consistently supported the desire for immediacy and transparency of rewards along with improved customer experience and proximity to the loyalty “experience”, some important brands proved they were listening.

Early in the year, American Express played the social card as it touted Membership Rewards as a “social currency” and tested location based promotions with Foursquare. More recently, Groupe Aeroplan rebranded as Aimia, signalling a new era of competition among industry leaders.

In a year when many industries slogged along in a mediocre economy, Loyalty Marketers could barely keep up with all the change.

What will 2012 hold in store? I’ll have a look at trends to watch in a future post as the New Year gets started.

Whether transferring funds to a close friend or family member or remitting payment on a business invoice, we’ve all got to deal with the issues of money transfer. Payments are central to our lives and how we pay has cost implications for both the merchants we patronize and our own personal budgets.

Today I’m not only thinking about competition within traditional methods of payment, but also payment methods that come bundled with loyalty and social shopping applications.

Let’s look at the tradition payment space first. Within my network of highly mobile loyalty consultants, the Customer Strategy Network, we are fortunate to share project work and often move money between us as a result. I can remit payment to a colleague internationally via bank wire transfer, PayPal, or by check. Since bank hold policies on foreign checks border on ridiculous, wire transfer and PayPal seem to be the two best options.

One would think that wire transfer fees are more formidable than using PayPal, but interestingly enough, a transfer of  $2,500 from the bank costs $40 while using Paypal rings up a charge of about $157 (nearly 6%) if I link my Paypal account to a credit card, and closer to $75 (3%) if linked to a bank account. Just when we thought the banks were wringing out every last dollar from consumers following passage of the Durbin Amendment, PayPal is revealed to be generally more expensive to use.

Surprised? I was.

Next, consider payment methods tied into loyalty marketing schemes. Dwolla is actually the only one of which I am aware, and the innovative payment/loyalty group charges a fixed fee of $.25 per P2P money transfer or purchase transaction within its merchant network. That charge is normally paid by the payment recipient and doesn’t apply to transfers under $10. This of course would be a game changer in the payments sector, but only if Dwolla can enable payments outside of the US. Current restrictions on maximum transaction amounts are acceptable, but no payments are permitted outside of US borders. For the record, personal payments of $5,000 and business payments of $10,000 are allowed.

If Dwolla has aspirations to challenge PayPal and to become a payments solution beyond US borders, they will have to expand their model. For now, the low cost structure of domestic payments and embedded loyalty offers through the Spots program make Dwolla a better option than PayPal within the US. Using Dwolla Spots to locate merchants who accept the payment method and to be able to shop conveniently with local merchants even if you left your wallet at home is one of the big advantages of the program.

All you need is a GPS enabled Smartphone that allows you to find merchants and you can order and pay for purchases even before you enter the store.Imagine, the barista that not only knows your regular order but also has it waiting piping hot for you as you walk through the door, payment already completed. That’s got the makings of customer engagement and loyalty right there.

One other payment alternative linked to a loyalty program is the prepaid card. Starbucks and Dunkin’ Donuts each have put a prepaid card at the center of their loyalty programs. The downside of this model is that consumers must use the prepaid card for all purchases if they hope to earn loyalty credits. The upside is that Starbucks has added the convenience of being able to pay for purchases with a bar code provided in its mobile application (link) with the amount of purchase debited to the prepaid card account. Again, the convenience of being able to pay even when the wallet has been left at home, is something to consider.

With barcode technology widely available and NFC still needing some sorting, Starbucks has proven that low-tech (barcode) can be combined with high tech (mobile apps) to deliver convenience and to contribute to customer loyalty. The convergence of payment, mobile handsets and loyalty applications is not a concept on a PowerPoint slide anymore. It’s here before us, and becoming more of a reality every day.

The loyalty marketing landscape is changing – quickly and dramatically. Social Loyalty is a new concept to be understood and embraced.

Millennial marketing is a focus of Social Loyalty and I occasionally see posts about whether Generation Y (Millennials) can or will give their loyalty over a sustainable time period to any brand. Based on our study of Millennial behavior and backed up by recently published  research from Aimia on US and UK Millennials, we know that loyalty can be won, but not through traditional tactics.

One of the talked about tools to drive loyalty among Millennials is “Gamification”. The question is, how does game theory relate to loyalty marketing and how can it be applied in practice to get results, not just with Millennials, group but across the broader population segment known as Consumer 2.0?

I’m proud to be presenting “The New Face of Customer Loyalty: How to Engage and Motivate Customers in the Social Era” with a leader in the social loyalty space, Badgeville. The webinar will take place Tuesday December 6, 10am PST / 1pm EST and I urge you to register here to become part of the discussion.

Badgeville was recently selected to be part of Forrester’s annual list of social platforms for enterprise technology marketing in its report “Market Overview: 2011 Social Media Platforms For B2B Tech Marketing.” You can read more about that honor here.

There is a tremendous opportunity for leadership in this new world of loyalty marketing and I’m proud to be presenting tomorrow with Havy Nguyen from the Badgeville team to explore some of the possibilities.

Register here for this webinar and bring your tough questions about the future of Loyalty Marketing and Gamification to the event tomorrow.

There has been a LinkedIn discussion ongoing for several weeks that, if you care about customer marketing, causes you to stretch your mind a bit.

The question? “Can you use ONE WORD to describe the biggest challenge for Loyalty professionals?”

I read the litany of responses and found it worth documenting what keeps loyalty and database marketing professionals up at night. The answers that popped up with highest frequency fall into 2 categories and provide insight into the macro themes we are confronted with these days to build long term sustainable customer loyalty.

Core Challenges:

These one-word descriptions describe the challenges we have faced in loyalty marketing from the outset in the early 80’s. We’ve got to start with objectives to reach a good result and we are continually challenged to be financially accountable to project stakeholders.

• Accountability
• Budget
• Commitment
• Creativity
• Education
• Knowledge
• Objectives
• ROI

Loyalty Futures:

Now that we’ve mastered the art of enrollment, we are challenged to increase and maintain consumer engagement with loyalty programs. We need to do a better job using the massive stores of data we already possess as well as carefully enhancing it with more preference data to enable personalization.

We also need to move beyond traditional models and embrace ways to capture the attention of Consumer 2.0, an increasingly powerful population segment in the US and beyond. All of this needs to be accomplished in an environment of withering patience, both from corporate management and in terms of consumer attention span.

• Data
• Differentiation
• Evolution
• Engagement
• Non-conformity
• Patience
• Relevance
• Stickiness

The term most often suggested to define the biggest challenge for Loyalty Marketing professionals was Relevance, indicating a self awareness of our need to make program offers meaningful, transparent and “real”.  In turn we must communicate offers more effectively via preferred channels. It might also give a hint to the importance of including local merchants in loyalty programs to bring value to consumers on a daily basis.

Two other one-word answers to the question emphasize the changing nature of customer loyalty: Groupon and QR Codes. Translated, there are two distinct challenges to wrestle with here.

1. How to position traditional loyalty economics against the simplistic allure of deep-discounted daily offers
2. Whether and how to incorporate  social and mobile communications channels into existing programs

The (r)evolution known as Social Loyalty has begun and the new e-Book from Hanifin Loyalty of the same title will be released in January 2012. In the book, we’ll address the nature of the changes underway and shares strategies that you can use to remain relevant with Consumer 2.0 in 2012 and beyond.

Stay tuned.