Amazon announced it is selling more Kindle books than hardcovers, the US Postal Service is in jeopardy, and Continental Airlines will begin allowing travelers to scan themselves on board flights. As change marches on, what other familiar aspects of our lives will join the milk-man in a mythical global retirement home?

Keep an eye on traditional points-based loyalty programs, because they just might be next.

Points programs have been around for decades because, as my friend Jim Ryan told me, “they work”. Jim, the former CEO of Carlson Marketing, knows this business cold and although we both agree that points-based loyalty currencies are an effective medium to change & measure consumer behavior, the companies which foot the bill for these programs are increasingly opting for something different.

I did a market scan recently and found a few examples of how Loyalty Marketing is being redefined:

• Ford ran its “Fiesta Movement” campaign (to be profiled soon in Loyalty Truth) over a year ago, recruiting 100 agents to drive a Ford Fiesta and document their experiences through written and video blogs. The results? Ford created over 11 Million social networking impressions, created a 37% awareness of the new car across Generation Y (Millennials), and enjoyed one of the best new car introduction campaigns in years.

• Tropicana launched Juicy Rewards, a hybrid of the on-carton coupon model which typically requires consumers to enter codes online till their fingers bleed in order to win something of value akin to a paper clip. The difference here? Tropicana has aligned itself with a strong portfolio of merchants offering discounts that equate to 5X the value of the product purchase price.

• Clorox launched CloroxConnects, a social site that serves three key audiences, consumers, partners, and employees. Better described as an Engagement Platform, Clorox encourages participation from each group and awards badges and recognition rewards based on proprietary game mechanics.

Don’t miss the subtlety of these new loyalty program formats. Each program has well defined business objectives, predictive analytics and financial modeling are used to refine audience targeting, and a loyalty processing platform is needed as the backbone to run the program in most cases.

In other words, the fundamentals to engage, interact with and retain customers remain consistent. The key difference is that instead of keeping score by awarding points, companies are moving towards scoring as much by social behaviors as transactional.

For the past 30 years, Loyalty programs have been designed by Boomers for Boomers. The influence of a digitally connected generation is more apparent than ever, and consumer engagement will only happen if you re-tool marketing strategies to embrace the Millennials and others who want more transparency and immediacy in their brand relationships.

Are you equipped to make these changes?

The promise of social media to Loyalty Marketers should be clear. We’ve been advocates of establishing two-way dialogue with program members for the past 20 years, touting that only within the trusted environment of a loyalty program will customers share their preferences, aspirations, and concerns relating to your brand.

Don Peppers and Martha Rogers coined the term “1 to 1″ marketing in what seems an ice-age ago. While the concept was right, execution was too costly for most companies to absorb. It is one thing to craft promotions, offers, and communications by segments, but to drive personalization to the individual account level was not financially sustainable. After the first wave of failed CRM installations, the ambitions of “1 to 1″ marketing were softened to a more practical “Mass Customization”.

With CRM’s legacy of unfulfilled potential, one would think that Loyalty Marketers would be tearing apart the box labeled “Social Media” like a child on Christmas morning to see what’s inside.

I’m not sure it’s happening and here’s why:

Attending Card Forum & Expo in Marco Island last week, I heard a great keynote from Joshua Peirez, MasterCard Worldwide. His topic was innovation and he took an informal poll in the room of 200 bankers:

• Who’s on Twitter? – less than 5% raised their hand
• Who has a MySpace? – no one raised their hand
• Who has a Facebook page? – 25% said “yes”
• Who knows what a Kindle is? – 10% positive response

Given the median age in the room, I was almost relieved with the MySpace answer, but noticed the uncomfortable murmuring that waved through the room upon the mention of Twitter and Facebook. Mr. Peirez had made his point that “we” in the banking and card issuing industry need to understand, if not embrace, these new communications tools if we are to stay current in the market.

Listening to other sessions, my suspicions that all things social media were regarded as distractions to be enjoyed by the younger generation but not to be taken seriously by business, were reinforced.

There was a fascinating panel of “Retail Loyalty Leaders” facilitated by my friend and colleague, Rick Ferguson, Editorial Director Colloquy. Executives from Best Buy, Macy’s, and Saks shared how it was their most loyalty customers who continued to shop even after the economic downturn last fall, but made no mention of  social media until an attendee posed a question at the end of the session. Responses from the panelists were general and non-committal, indicating that social media was “interesting and deserved study” while not citing any ongoing programs.

Imagine you are standing on the crest of a ridge with the entirety of loyalty marketing knowledge under your arm. Across a deep ravine on the next ridge is Generation Y, all 80 Million of them. You can’t just walk over and engage them in what you have to say as there is a river running swiftly through the bottom of the ravine. You’ve got to build a bridge to reach the other side or you will miss the opportunity to engage this massive consumer audience.

Social Media could be the bridge. Read carefully, as I am not telling you that Social Media is THE answer or the ONLY answer. But, it is the best opportunity we have ever had to fulfill the promises of 1 to 1 Marketing.  The technology allows business to tailor messages to small groups if not individuals and the Millennial Generation is the first ever to be so forthcoming with personal insights and opinions.

There is evidence of experimentation in the space, with AirMiles Canada adding a community to its web site. It’s purpose is clear as the landing page advises  “Now there’s a place where you and other collectors can swap tips, experiences, and chat about anything and everything Air Miles”.

And there are a few active Loyalty Marketers with a presence on Twitter. If you open your own account and wonder who you should follow, you could start with @andrewkinnear,  @barrykirk,  @Phil_Rubin,  @Kobie_Marketing,  @LoyaltyLab,   @Loyalty 360 and don’t forget @billhanifin.

One of Hanifin Loyalty’s rules for engaging Generation Y is this:

• Don’t rationalize the need – you don’t have to like it or even fully understand it, you just have to do it.

Meeting the Millennials where they are sets the stage for engagement. How you present your brand from there is a topic for another day.

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