Will MyTeamUSA  (U-S-A! U-S-A!) attract loyal Olympics fans?

Does anyone remember the launch of the Discover Card? When introduced in 1985 as “the card that pays you back”, it really felt different from Visa and MasterCard. Forget the card’s super high interest rate—I was getting cash back on every purchase!

Times change and now the cash back bonus doesn’t feel quite so special, but an outfit called My Fan Rewards is putting a fresh spin on it. They’ve teamed with the U.S. Olympic Committee to launch a program called MyTeamUSA Rewards.

The program works like this: When you shop through MyTeamUSARewards.com, using any credit card, you not only earn cash back from the retailer—a like amount is given to support U.S. Olympic athletes. For example, shop at the Nike Store and you’ll earn 4% cash back, while 4% of your purchase is matched and handed over to the USA Olympic team.

The program is free and feels like a good way to tap into the emotions surrounding the country’s Olympics love fest. But the real test is coming: keeping fans interested in the MyTeamUSA program now that the Olympic torch at the Vancouver Winter games has been put out.

My take: a solid, targeted emotion-based communications program could do the trick. The key will be in getting program participants juiced not about the Olympics that just passed, but for the next Olympic games to come. (2012 in London, in case you were wondering.)

On a side note, My Fan Rewards is rumored to be expanding into the pro sports market next. It’s not a bad idea, as professional sports teams showing fans a little return love could help ease the grumbling about ever-increasing ticket prices.  (Of course, let’s hope the cash rebates will be a one-way affair, and go straight into the pocket of the consumer!)

Tom Rapsas is a 20 year direct and loyalty marketing veteran and heads up Creative Services at Hanifin Loyalty. He can be reached on Twitter @tomrapsas

Trendy business buzzwords aren’t any fun until you form an opinion and seek feedback to get to the substance of the issue.

Customer Engagement is one of those terms that is being mentioned more frequently than Kim Kardashian was during the Super Bowl. It’s the 2010 version of “what’s hot, what’s new, what’s next?”

The question is, should Customer Engagement be treated as a new marketing sub-set, on par with Loyalty and Word of Mouth Marketing, or is it a concept that’s been around for quite some time and just happens to be a point of pain in the Relationship Value Chain (RVP) for marketers today?

Relationship Value Chain? That’s the term that my good friend and former Colloquy colleague, Kelly Hlavinka, coined almost 10 years ago. The experience of many at the once proud Frequency Marketing was that customer value increased across a spectrum of customer interaction. Link the points of interaction and you had a value chain that loyalty marketers could use to influence communication plans and allocate marketing budget dollars to encourage specific behaviors.

The RVP is similar to the “acquisition – activation – usage – retention” lifecycle marketing that credit card issuers have been using for years, but takes objectives down to a more granular level.

One example of a flow that constitutes a RVP:

• Awareness
• Response to Invitation
• Program Enrollment
• First purchase
• Multiple purchases in response to offers
• Redemption for Reward
• Response to Survey
• Response to Future Bonus
• Multiple Redemptions

No one has a lock on defining the steps in the chain as they should be customized to the business situation under review. Going to back to Customer Engagement, just where does it live in the value chain used as an example here?

Let’s look at a few steps in the RVP and see where, if accused of being “Engaged”, there would be enough evidence to gain a conviction!

Program Enrollment – Doesn’t everyone enroll in programs without much care for future interactions? I enroll in just about every program where I know the odds are that I’ll be back (by choice or force) and the offer looks worthy enough to give it a whirl. The only caveat is that I won’t sign up if the data collection hurdle is too high at the outset.

First Purchase – You’ve got my attention, but what makes you think I’m “Engaged”? I may be a cherry-picking consumer or have just satisfied a one-time need for your product or service. Not enough evidence to convict me as engaged at this point in time.

First Redemption – I’ve stayed around long enough to make multiple purchases over time – how else would I have qualified to redeem? But did you catch me in a cycle of life that won’t soon be repeated, or can you count on me to do it again? Engagement? We’re getting closer, some say “yes”.

Survey Response – I’ve transacted, collected, redeemed, and now I am willing to actually have a conversation. You’ve got my attention, but I am skeptical of what you will do with the information and if I will hear from you again. Does this sound akin to dating? Conversation is certainly an accelerator to engagement, but does not constitute the end goal itself.

Multiple Redemptions – Once I’ve completed the purchase/collection/redemption cycle more than once, I think you can count me as “Engaged”. The focus shifts now to retaining my interest, expanding the conversation, and developing more business as a result.

My take on Customer Engagement is that it describes an end objective that marketers hope to achieve through smart execution of a well designed data-driven Customer Strategy. If you try to define engagement as one of the individual steps, take Enrollment as an example, then what you are truly talking about is more tactical ala “how to create awareness for a program and convert interest to enrollment”.

It’s a step along the way, not engagement itself.

The Loyalty Truth on Customer Engagement is that it has been around for quite a while. The reason the topic has been deserving of the spotlight lately is that customers are increasing difficult to engage, not to mention retain.

What’s your take?

In the past week, business has taken me to Vancouver, BC and San Jose, Costa Rica with a pit stop in South Florida for a day or so at home. None of that was a big deal until my colleague Mike Atkin noted at dinner that we’ve been hitting these spots in conjunction with some pretty big events.

We arrived in Vancouver exactly one week before the start of the 2010 Winter Olympics, landed in South Florida the day before Super Bowl XLIV, and arrived in San Jose on election day as the country was electing the first female President in its history. I’m not sure how I can top that although I have noticed that I arrive back in SoFla just in time to make Valentine’s day special for my wife. Better pull that one off!

I’ve also been using Foursquare for a while and, like a lot of social media waves, I engaged knowing that it would cost me a little time without being sure of a return. I’ve been having some fun with it around my local haunts and have been thinking about how something like Foursquare could intersect with location based offers as part of a loyalty marketing program. My first eye-opener was the blending of Foursquare and Twitter into the Tasti D-Lite rewards program which I talked about in a recent post.

This last jaunt across the continent and back connected a few dots. Checking in to my hotel in Vancouver, I saw a pop-up on my iPhone that said “Special Nearby”. Clicking through, I read “Welcome to the Mill Marine Bistro & Bar. Mayor receives a free beer. Show your server to redeem.”

I wasn’t the Mayor and didn’t get a free beer, but Mike and I did visit the nearby pub to have a quick dinner. The point made was that promotions relevant to someone’s stay could be delivered via this little iPhone application. Better yet, these offers are made to people who have opted-in to receive the offer. in this case, the Mayor might game the offer to get lots of free beer and over time I hope the restaurant will become more creative in the offers made, possibly targeting guests at the hotel next door.

Landing in FLL a day or so later, I switched on the phone and “checked in” to Fort Lauderdale – Hollywood International Airport and received a tip from a local attorney, Leland Garvin. On the verge of the Super Bowl weekend in SoFla, what better message could an attorney send than (paraphrased) “Have fun while in town, but if anything happens from arrest to a speeding ticket, call Leland Garvin, attorney at law.” A phone number was included and if I was a “Who Dat” ready to tear it up for the Super weekend, I would have written it down and tucked it somewhere safe.

With lots of minds grinding on how to incorporate mobile marketing, location based promotions, and social media into loyalty program communication streams, these two “pops” from Foursquare got my attention and sparked some good ideas.

Consider the possibilities. What’s it make you think about?

After spending the last few weeks thinking through reasonable responses to my new favorite question for 2010 “Do you think Social Media is here to stay?“, I’ve recently been re-directed to my “old” favorite question that I have been answering for 12 years “Do loyalty programs work?“

Without disappearing completely down that gopher-hole, I’ll just say that there is enough discomfort in using the “L” word that industry insiders are redirecting the conversation to new labels. Is it any wonder why Customer Engagement has been the buzzword of the year?

Lifecycle marketing in the credit card business has always hinged on the “Activation, Usage Retention” triad. In retail, there is a similar flow with “Awareness, Visit, Purchase, Return“.

I believe that within these lifecycle flows, Customer Engagement has always existed. Activation can be broken down into Awareness & Engagement leading to Activation. You get the idea.

So why is Customer Engagement being given so much attention these days? Maybe because marketers have always found it one of the toughest steps to effectively manage in the relationship value chain. And, maybe it is because in 2010 the job is increasingly difficult as consumer attention spans are shrinking each day.

Not too long ago, I went to see the end-times movie “2012″ and the challenge of customer engagement was made crystal clear. As the final scene faded out, the entire theater full of patrons jumped to their feet and headed to the exits. As I sat comfortably watching the credits scroll by, I noticed that I was literally one of three people still in my seat. I had noticed this behavior before, but finally connected some dots.

You see, consumer attention spans have been shrinking for several years and the pace of shrinkage shows no sign of slowing down. The question is: how do marketers hope to create and maintain “customer engagement” when “customers” (us) can barely pay attention long enough to change the channel?

With tongue only slightly in-cheek, I believe the slide in customer attention span all started with USA Today. The snippet-based paper lowered the bar for people to gather their news, requiring them only to read a paragraph or two and then turn the page. After a while, reading a news story in the New York Times seemed like sitting down to crack War and Peace.

The die was cast and a new standard was set for how consumers gather their news – short entertainment-driven sound bytes that could be absorbed while multi-tasking negated the requirement for thought or analysis. Now we have a “crawler” on everything from CNN to ESPN to summarize our news for us, and we are sharing our subjects of interest with friends through quick SMS messages and IM blasts. Even the outflow of natural disasters as recently occurred in Haiti are threatened by our short attention span.

Compress the communication further by limiting our messages to 140 characters on Twitter and it is clear that there is more emphasis on the announcement than the content inside. In the business world, we are increasingly asked to summarize key thoughts and initiatives into “one pagers”.  Weeks & months of work on strategic plans are being distilled into executive summaries that are shorter by the day. It almost seems as though even a brilliant business plan or strategy is doomed unless there is an effective elevator speech to go with it.

The trends we have seen in Loyalty Marketing include members who want to achieve award status quicker and redeem more often for smaller “attainable” rewards. Converting points for cash back certificates at the point of sale is high on the list for many program operators.

If you agree that attention spans are compressing daily and our own internal communications are being driven by 3 PowerPoint slides and a “one pager”, what tactics can we hope to successfully employ to engage our customers?

I think the answer is two-fold:

• First, we can go back to social media – as we might just have to meet people “where they are” rather than hoping to bring them into our web, our way.
• The second is to never forget that every house has a kitchen table or something akin to it. People still gather and enjoy each other’s company in informal settings. Putting a catalog or brochure on their kitchen table gives them something to talk about – YOU. Personalizing that catalog based on known behaviors makes it even more of a conversation piece, once opened.

Pairing these two unlikely partners – Social Media and Direct Mail – might just work. Give it a try.

Over the recent holidays, my friend Bill Hanifin pointed out a post written by the person arguably at the forefront of the whole social media movement, Chris Brogan. In the post, Brogan said, “People are slowing down to turn their thoughts to family and to their own development, and to what worked and what didn’t in 2009. Not me.”

While he did leave an escape hatch for those choosing to bail out during the holidays “You don’t have to do it this way”, Brogan was working as hard as ever, holidays or no holidays.

It got me thinking about Napolean Hill, author of the classic Think and Grow Rich. Although it was first published in 1937, the book’s message about gaining monetary success through hard work, determination and positive thinking, still rings true today. The popularity of the book endures as well, as it ranks in the top 1,000 books on Amazon.

What a lot of people may not know is that in 1967, three decades after the publication of his magnum opus, an 80-year old Hill put out a book with a more expansive view of the role of work in our lives. Its title: Grow Rich—with Peace of Mind.

While offering many of the same valuable lessons on self improvement as Think and Grow Rich, Hill adapted his message to basically say, grow rich—but have a life, too. We’re not talking 4-hour workweek here, but Hill did suggest we “make a time budget”.

Spread out over a 24-hour day, his time budget looks like this:

• 8 hours a day for sleep and rest
• 8 hours a day for work at your business or profession (but as your success grows, less work)
• 8 “particularly precious” hours “devoted to things you wish to do, not have to do”

Hill’s suggested list for the final 8 hours includes: “play, social life, reading, writing, playing a musical instrument, tending a garden, or just sitting and watching the clouds or the stars.” (I would add “spending time with family.”)

Hill further amplifies the point with this passage: “Do not let a day go by without taking some time for yourself — some time you spend in pure pleasure, as you see it.” He adds, “With increasing success, increase your hours of pure enjoyment, do not allow these hours to be eaten away by business or anything else.”

God bless Chris Brogan, he’s an inspiration to all of us. But there’s something to be said about the whole work-life balance thing. And while I have personally set business goals for 2010, following Hill’s lead, I’ve set leisure ones as well.

The bottom line: Sure, let’s get rich. But let’s not forget that success is measured by more than the balance in our bank accounts.

Tom Rapsas is a 20 year direct and loyalty marketing veteran and heads up Creative Services at Hanifin Loyalty. He can be reached on Twitter @tomrapsas

Editor’s Note: Tom’s post made me think that the most desirable rewards in loyalty programs are often the experiences and exclusive content or access to an event which can be earned as a freebie, but aren’t always available for public consumption.  It seems that learning more about what drives human emotion, happiness, and satisfaction will lead to more effective marketing strategies as well.

Almost 10 years ago, I wrote an opinion piece for COLLOQUY questioning whether Frequent Flyer miles were still the most valuable currency in the Loyalty Marketing landscape.  The premise was that the weakening value of the FF mile might open the door for a better offer to capture the loyalty imagination of consumers. The next best high-value loyalty currency was thought to be coming from a US based coalition ala Nectar or Airmiles.

It’s 2009 and time to ask the question once again.

Consumers and the press are piling on with criticism of airline mile programs. Combine the higher thresholds for cashing in for a free ticket, the seemingly steady decline in the quality of in-flight experience, and the airline’s fascination with un-bundling and charging for services that used to be included in a ticket price and it’s easy to make a case for the demise of FF miles.

The COLLOQUY article was cautious in criticism of the almighty MILE, noting that “Americans are so attuned to earning airlines miles that it’s hard to create a value proposition, either in a standalone program or in a coalition, that can equal them.”

Time and change go hand-in-hand however and the challenge of creating that value proposition to match or exceed the perceived value of an airline mile might be easier to tackle as each month goes by. A recent Wall Street Journal article “Air Rescue: Saving Miles From the Ax” highlighted the many ways which airlines are adding restrictions and tweaking program rules to burn more miles before they can be used.

Many of the rule changes highlighted in the WSJ article are activity related and American Airline’s change from no expiration to an 18 month activity related rule has garnered lots of attention. There are two sides to every story and, if you were running AAdvantage or any other big loyalty program, you too would be under pressure to manage program liability more closely. It’s easy to see why stewards of loyalty programs conclude that customers who have not transacted for 18 months are maybe not your customers any more.

The flaw in the activity rule highlights the dirty secret of airline mile programs: that customers are less loyal to a particular airline than the industry would like to believe and carrier choice is often dictated by lifestyle and business changes more than brand affinity.  I’ll share a personal example. At one time, most of my my travel was in Latin America and I was a privileged flyer with American. Later, the work load swung to the US and I rose in the ranks of Delta Skymiles members while I watched my American status diminish. When I ventured back into LAC, I had lost my status with the airline and had to be patient until I became “visible” again.

The airlines should be able to recognize me as an inherently valuable customer and provide some relief for my straying. Through the data collected, the airlines could identify my return, send me a welcome back email and inquire if I was here to stay. I bet most people would respond to such an email with indication of preferences and plans if they were offered incentive to provide the information. That incentive, of course, would be to have the opportunity to earn accelerated status with the airline. In the current situation, I am more tempted than ever to just shop by schedule, price and airport location.

The other main criticism of airline miles is that they are difficult to redeem.  If you’re like me and redeem miles to take the family to exotic destinations like Buffalo or Cleveland, you’ll never have a challenge redeeming your miles. Try to go to New York for Christmas and you’ll have a different story to tell.

It’s possible that the airlines are their own worst enemy. They have given miles to everyone and are still inviting people to join their programs with in-flight announcements. Even the Economist agreed that this non-selective behaviour would spawn MILE inflation:

“Miles outstanding have risen by an average of 20% a year since 1995 – two-and-a-half times as fast as the supply of dollars.”  Equating this inflationary expansion of airline currency to a key global currency, the article continued, “central bankers would suffer sleepless nights at such reckless  monetary expansion were it not for the fact that they are usually up in first class collecting double or triple miles.”

The state of the FF mile is really quite a mess. There are diverging forces at work: Consumers are less interested to wait and accumulate miles as they know that rules will continue to shift against their interests and their ability to redeem will be challenged. At the same time, the cost of using miles to promote a cobrand or reseller relationship is probably the highest among options in the marketplace.

Invest the same cost per mile into a value proposition that promotes YOUR brand and is truly tailored to YOUR customers and quite likely you will have constructed a value proposition that beats the heck out of FF miles.

Turbulent times for the airlines, opportunistic times for smart marketers……

I recently shared a story in the Toronto Globe & Mail about how Canadian parents would rather talk with their children about sex, drugs or alcohol than money.

Sometimes when I talk with stakeholders responsible for loyalty program operations, I get the feeling that the question draining their complexion is not far from that mark. “Who pays for Loyalty?” is a simple question that can cause discomfort and spark lengthy discussion.

My first boss (just a few rungs up) was Hugh McColl, the ex-marine who built North Carolina National Bank (NCNB)into a regional powerhouse and set it on a course to become what is now Bank of America.  Mr. McColl taught me a lot and had a famous way to simplify the evaluation of a company’s commercial credit risk. In the middle of heated debates about which ratios should be included in a financial analysis to see if some Fortune 100 customer was able to handle a loan under consideration, Mr. McColl would remind us that “all loans have to be paid back from cash, somehow, sometime.”

This pure logic should be remembered by retailers as they push harder to lower interchange rates for card transactions. As the rush to meet implementation deadlines for the Credit Card Act of 2009 dwindles, attention is turning once again to interchange. A good take on the current debate can be found in this article.

The question before many loyalty sponsors today is actually closer to “How can I pay less for Loyalty points?” The behavior of card issuing banks responsible for loyalty programs during this recession speak loudly that reducing cost is high priority. The changes to program rules to hasten forfeiture of points or miles, added fees for redemption, and additional points needed to redeem rewards have all been applied in well known rewards programs over the past several months.

Funding the cost of loyalty can be borne by one party or shared by partners.  How the breakage of those points is shared influences how each party manages program rules and drives more (or less) breakage. In some pay-for-performance models where participating merchants fund rewards to debit card holders from their banking partner, breakage is not a critical issue for either party.

• The bank, typically paying out rewards as a cash back account credit, is not too concerned about the nearly “100% redemption rate” occurring since the retailer is footing the bill.

• Fortunately, the retailer is able to offset its expense with incremental sales earned, all of which is accomplished by a lower than average give-away (10% cash back equivalent versus 40% markdown).

Some people have tried to paint this “merchant funded” model as banks taking advantage of retailers, but I disagree. Intelligent targeting that drives incremental sales and reduces the retailer’s reliance on discounting, while delivering increased card spend at lower cost to the bank is a win-win for all parties.  With retailers papering the walls with “40% off everything in store” signs just to get consumer attention, funding the equivalent of a 10% cash back in points is an attractive alternative.

In my opinion, the renewed emphasis on legislating interchange rates is the red-herring of the year. Yes, MasterCard, Visa, and American Express have a lock on the acceptance network at the retailer. But any perceived threat of monopoly can be balanced with understanding that merchant sales increase when cards are accepted. The cost is high, but at this point, the opportunity cost  is unacceptable.

It is entirely reasonable that business wants to reduce cost, and here’s the lowest hanging fruit – train front-line personnel to stop asking customers if they want “debit or credit” and encourage them to enter their PIN for debit transactions. Consumers really don’t care how they use their card as long as the purchase is completed and there are significant cost reductions to be enjoyed by a continuing shift to PIN based purchases.

If the focus remains instead on reducing credit card interchange rates, card issuers will see a key driver of the rewards business case in jeopardy and could shut down the rewards nozzle even tighter. If cash is not available from the banks, if rewards cards were to go away all together (they won’t), retailers would be left to subsidize their own loyalty marketing efforts without the prospect of shared funding from another source. Private label cards are probably not a holistic answer as consumers have spoken that they want more utility from their payment devices and are only willing to carry the cards with highest utility in their wallets.

In a world without card based loyalty, retailers would be left one tool short of a solid toolbox. Breaking the cycle of discounts and endless sales will be increasingly difficult and consumers will be further trained to wait for the greatest discounts before “footfall” occurs in store.

Here’s the best part: consumers don’t care who pays for loyalty. They want the utility of their payment card, want to earn rewards, and want the best price with good quality from the items purchased in store. I would not want to be retail executive who puts a huge dent in interchange and, while celebrating a temporary victory, watches revenues shrink as the alternatives to ever growing rounds of discounts and pure price competition are diminished.

The visual image I leave you with is Leon Lett getting the ball knocked out of his hands just before he crosses the goal line and is denied his touchdown by Don Beebe on a play that should have led to a massive celebration.

PS: That play might be the only highlight for the Buffalo Bills in Super Bowl XXVII

In the beginning, there was Air Miles. Actually, according to history, it was three men in a room that started Air Miles.

According to Air Miles corporate history, Keith Mills wasn’t one of those three guys, but somehow later it was Sir Keith Mills that sowed the seeds of the Air Miles brand and business model across continental Europe. Eventually, Sir Keith helped to found Nectar, the successful coalition loyalty program based in the UK.

There is a passage in Exodus when God tells Abraham that “I will make your descendants as numerous as the stars in the sky and I will give your descendants all this land I promised them, and it will be their inheritance forever.”  I am tempted to make a tongue-in-cheek analogy between Abraham and Sir Keith, though the family tree is becoming quite muddled at this point in time and the coming battle between Air Miles and Groupe Aeroplan will ensure that no-one’s inheritances comes easily.

Aeroplan, the spin-off of Air Canada’s frequent flyer program, has not been satisfied to improve its core business, but has set about acquiring loyalty schemes around the world, the most notable of which, until yesterday, being Nectar. Air Miles, to its credit, has apparently been eyeing expansion opportunities and recently announced that it has made a 29% investment in Dotz, the evolving coalition program in Brazil.

Yesterday, Aeroplan announced its planned acquisition of Carlson Marketing. It is not completely clear what the US$188 Million price tag purchased, but presumably Aeroplan has just strengthened it capabilities in offering a complete processing and operational solution for the large companies it is seeking as potential clients. It has also significantly added to its strategic planning abilities assuming that Peppers & Rogers is included in the deal.

The announcement will get the attention of the Air Miles folks in Toronto and its subsidiaries LoyaltyOne & Colloquy will increasingly feel competition in a sandbox that was nearly their own to play in until now. Half the residents of St. Louis will stay awake at night as well as Maritz, MasterCard and others seeking the crown of “leading loyalty solutions providers”  find themselves up against stiff competition and deep pockets.

What is means for the rest of the industry will be sorted out over the coming months. One message that is clear is that there is money to be made in Loyalty Marketing, especially if you are the owner of a currency that becomes valued by consumers and is traded widely.

There is also that the likelihood that consolidation will breed greater need for independent viewpoint, analysis and recommendation. Corporate executives making decisions with long term financial implications would be well served to evaluate the source of their advice.

Aeroplan and Air Miles trace their roots back to the same family tree in many ways. Let’s see what kind of family feud will brew now that Aeroplan has upped the ante of the game.

Fred Reichheld may have asked the Ultimate Question, but few seem to have “just one answer” to the question.

Napoleon Hill was quoted as saying that  ”Lack of loyalty is one of the major causes of failure in every walk of life.”

I tend to agree.

In business and in life, if you show sincere concern for another and if you frame your relationship in trust and transparency, the odds will be in your favor to win better results.

Just because I coined the term Loyalty Asterisk™, doesn’t mean that I want to see it perpetuated in business.

Customers are concerned with the privacy and protection of their personal data. They are increasingly skeptical about online targeting of advertisement and promotion.

Companies which make a commitment to using their data in a responsible manner, who deliver customer experience and product quality consistent with their brand promise, and who treat Loyalty Marketing as icing on the cake rather than the cake itself, will be the winners as the economy ramps up once again.

A few thoughts on challenges facing an industry entering adulthood.

Loyalty Marketing has its own two-edged sword to contend with. The collection of customer data is essential to delivering offers and promotions that influence purchase decisions, but the spotlight on responsible management and protection of this same data is intensifying as the industry matures.

For technology suppliers, it is no longer enough to have the most powerful bonus engine or coolest looking web template for customer service. To serve just about any client of substance, suppliers these days have to comply with data protection standards and have certifications that are problematic to obtain and expensive for the organization to preserve. SAS 70 audits and PCI certifications are just two examples.

As marketers, we can’t be cavalier about collection of transaction and personal data. Data theft and misuse will be the “Swine Flu” of Marketing if we are not diligent, forward looking and eminently respectful of customer information. Publicized data thefts have been oriented to private label and other credit card issuers, but that doesn’t mean the bad guys aren’t chipping away at loyalty program firewalls as we speak. The hacker’s dream is as much to demonstrate power and create inconvenience as it is to reap profits, and we have to anticipate the myriad of possible attacks and associated risk that will threaten our customer’s confidence and our corporate reputation.

While building Fort Knox around our data, we also have to keep in mind that it is only given to us by customers in the first place in expectation of receiving better service, higher recognition, and to save money as a result. Wasn’t that your implied promise when you asked for survey participation? If we don’t commit to intelligently use the data we collect, and in a manner that is evident to the customer, we should pledge to purge our storage drives on a regular basis.

The taxman continues to sniff around our industry as well. There are recurring initiatives to treat points earned or rewards redeemed as taxable income. Fortunately, the talk doesn’t get very far, but with the current administration in Washington, don’t bet against it coming up with more support over the next 3 years.

We also have to be aware of consumer privacy concerns as we test out new technologies to communicate with our program members. There is little evidence through research that consumers are willing to be “tracked” by an RFID device embedded in the loyalty card in order to trigger proximity-based offers. Credit card issuers and credit scoring bureaus are already factoring in the patronage of specific business types into their risk models. Will this level of scrutiny dissolve the marriage between mobile payment and loyalty before the ceremony is complete?

A recent study by the Annenburg School of Communication at University of Pennsylvania punctuated the idea. 63% of respondents reported that their surfing history should be deleted right away. Overall, consumers were less interested in targeted marketing pitches than previously believed.

As the Loyalty Marketing industry passes through adolescence, it is bound to encounter growing pains. In sharing these issues, I hope to stimulate some conversation around the solutions. Send me your thoughts…