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.

EMV cards have been in the spotlight this year, with JP Morgan Chase, U.S. Bank, and Wells Fargo making announcements of portfolio migration from magnetic stripe cards to plastic that carries both mag stripe and a “chip”.

Market leading loyalty researchers, Colloquy, featured chip cards in the U.S. in their most recent issue, interviewing Randy Vanderhoof, the long time leader of the Smart Card Alliance, for insight into the wave of change hitting American shores.

Emerging from the smart card discussion, there are two key topics for debate.

1. Over what time period will U.S. migration to EMV take place and at what cost?

2. Will the widespread adoption of EMV cards by U.S. issuers represent a launching pad for loyalty program innovation?

Funny thing how history repeats itself:

• In 1996, Geno Pandolfi, a brilliant creator of payment and loyalty solutions who operated well ahead of his time, developed a smart card interface for his loyalty software, Cobrasys. The solution became part of the many smart card pilots trialed by Visa in Latin America during the late 90’s, and was the operating platform for the Bonus coalition loyalty program in Peru.
• During a 5-6 year stretch between 1998 – 2004, I attended the annual Smart Card Forum which brought together vendors and solutions providers focusing on bringing innovation to the payments business. Randy Vanderhoof was a prominent part of those discussions – most of which were addressing the same questions I have noted above. During those events, I tried on George Jettson-like Java-enabled rings that could be passed before chip enabled readers at POS and bought sodas at the conference events with my smart card loaded with a prepaid purse.
• During my years with Frequency Marketing through 2005, Jim Kuschill, the “godfather” of loyalty processing software technology (in my book at least) invested countless hours to understand what marketers could deliver to consumers in the way of loyalty via Chip that couldn’t be done with a mag stripe. The answer – not much.

Now, it seems, we’ve gone “back to the future” and are opening a similar debate once again. If you’re interested in a “Loyalty Lifehack”, I’ve got one for you:

• EMV cards are being introduced in the U.S. because the case to reduce fraud is so overwhelming that card issuers have no choice
• Trying to create buzz about EMV from a loyalty standpoint is peripheral to the discussion as the real debate is about cardholder protection and payment card utility.

You see, as the U.S. is the last significant nation in the world to adopt the EMV standard, the fraudsters have come to our shores to take advantage of the easiest mark on the globe. Add to that Americans traveling abroad are increasingly targets of fraud as they have only mag stripes cards to use, and the utility issue comes center stage.

Richard Sanders sounded this alarm in 2006 at the last Smart Card Forum which I attended. Richard is a globally recognized payments and loyalty expert, having run the credit card centre of excellence at Visa EU, launching the first “chip and pin” card program in the UK with Abbey (now part of Santander) and now sharing his wisdom with clients of ACI Worldwide, where he serves as a Solution Consultant. ACI recently published a comprehensive loyalty survey based on the retail field which garnered much attention in the press.

During a talk about loyalty and chip cards, Richard told a packed room that “whether they liked it or not” chip cards would come to the U.S. sooner than later. Richard predicted the timing of the introduction would correspond with the migration of other nations to the EMV standard, leaving the U.S. alone as the world’s “fraud magnet”. Some delegates listening scoffed at the idea, responding that our low-cost, always-on communication systems negated any benefits from EMV.

It took a few years for the prediction to come true, but Sir Richard was right. EMV is coming soon, and with the current legislative pressure on swipe fees, we may well see a Chip and PIN model taking hold just as it did in European markets. Whether the eventual form factor is based on contact or contactless acceptance at POS is another subject for debate.

To the question of whether EMV will spell differentiation for loyalty marketers, please don’t bet the farm on it just yet. One reasonably successful example that I have seen is BBVA Bancomer’s migration of its Puntos Bancomer program to Vida Bancomer circa 2006. That program used its new EMV capable cards to carry a purse of loyalty points which could be redeemed with merchants as part of a purchase transaction.

The success of that program was largely made possible through the fact that Bancomer not only was one of the largest issuers in Mexico but also a leading card acquiring organization. With the entire processing, authorization, and settlement lifecycle under its roof, Bancomer was able to recruit merchants to participate, and added some zip to a program originally motivated by the EMV migration.

What’s ahead? Maybe you should have Richard Sanders on speed-dial as he has been living with EMV and Loyalty for the past 10 years.

My guess is this:

For Payments: Count on the mag stripe co-existing with chip for the next 3-5 years and then gradually phasing-out. The speed at which terminal conversation can take place and the determination of “fallback” policies will dictate the horizon.

For Loyalty: Some loyalty programs will use available real-estate on the chip to facilitate instant redemption and other “in the moment” rewards, but look for more powerful innovation through mobile, social, and location enabled paths.

Feeling “chippy” about the subject? It’s a complex subject, so drop a comment and spark the debate!

Anytime we review a loyalty or rewards program for our readers, we use the available facts as assumptions in a model that estimates the effectiveness of the program.

Because all customers are not the same, we normally create a customer profile based on spending patterns and objectives and project the earning velocity for those segments. As a result we are able to offer insights into the program’s customer value proposition and then bake in evaluation of the communication methods used to engage the customer and the extent to which data is used to deliver relevant and targeted offers.

A final factor in this methodology is to assess whether the program creates a defensible competitive advantage to the sponsor. In layman’s terms, we run the acid test of differentiation – does the program have unique and proprietary features or is it another example of “me-too”?

Recently we ran across the rewards program at FreeConference.com. Thinking that services like this were “liked” by smaller businesses on a budget and seeking to avoid higher-priced subscription based alternatives, we constructed a customer profile that assumed a take rate of just the two premium level service packages.

The math showed that collecting airline miles through the FreeConference.com Rewards program would result in a round trip domestic airline ticket after a mere 12 years of usage. Another point of criticism was that requiring the customer to put in a credit card in the midst of the sign-up process would hurt enrollment rates. This requirement has historically hurt take-rates, therefore our assessment.

Our final comment concerned the use of airline miles as a currency. The granddaddy of all rewards currencies still appeals to consumers, but no barrier exists to prevent competitive response, and miles are expensive on a unit basis relative to other currency options.

Taken together, we gave the program poor marks. To my delight, FreeConference.com CEO Chad Clawson wrote in to tell us our assessment was incorrect. Mr. Clawson informed us that Freeconference.com has a premium toll-free conferencing offer in which customers spend tens of thousands of dollars per month, meaning the customer profile FreeConference is seeking to engage and retain has a spending profile that generates earning velocity to an acceptable level.

Because these premium customers already have a credit card on file, enrollment in the reward as program is easy and the response rates have been “terrific” according to the company. Mr. Clawson pointed out that only paying premium customers are eligible to join the rewards program, and they have already provided a credit card number to establish their account. New premium customers enter a payment card as well therefore FreeConference is not asking for anything the customer is not already willing to give as part of the premium offering.

For as much as loyalty practitioners understand about loyalty programs, shared data from sponsors is hard to come by. The advantage for many of us working in the business is that we have an accumulated perspective based on the results of programs we have designed and helped to operate. There are surveys that help to round out our viewpoints, but attend an industry event and you’ll see that the slimmest part of every presentation covers program results.

It’s for that reason exactly that I was delighted to hear from Mr. Clawson and further pleased that he was willing to engage in a conversation to discuss his program in turn allowing us to “get it right” at Loyalty Truth. Mr. Clawson fairly asserted that “I can understand how, from the outside, the Loyalty Rewards program may not seem to make sense, but that is only because of a couple of factual errors.” From that point, we cleared up the factual assumptions leading to this post.

Loyalty Truth holds its ground on the use of airline miles as the chosen currency to support the program. The offer can be copied easily by a competitor, meaning the program could become table stakes at any moment. Also the airlines have a much publicized capacity issue which creates a perception among consumers that airline miles are difficult to redeem.

The bottom line is that the program is working for FreeConference.com. Corporate customers like to accumulate airline miles and we believe that several new initiatives will be introduced in the near term providing a relief valve to the capacity issue.

Our discussion with Mr. Clawson is one of the reasons we established Loyalty Truth and indicative of why we chose the name. I’m also delighted to have been named a member of the “Honest Blogger Club” in the process.

Something all of us who pound the keyboard and spin our opinions should remember that there is a perception about bloggers that many are crafted hastily with minimal research and little regard for the impact on third parties. To receive correction and “go dark” is the mark of an unreliable information source. To engage the conversation and make corrections earns entry into the Club.

I’m grateful for this interaction with FreeConference.com and hope to have more information to share about their program in the future. It would be great to know the size of the membership, the extent of revenues represented by members, and the delta between customers of similar profiles pre and post enrollment.

Most importantly, I’ve got a conference call to organize and know just where to go to continue to get the good quality service offered by FreeConference.com.

The practice of Loyalty Accounting has become increasingly important as programs have matured and the value of deferred financial liability on corporate balance sheets has grown.

The key offset to the balance sheet liability is breakage. It is the word used to describe the value of the accumulated points that go by the wayside and is controlled through published Terms and Conditions, the fine print that accompanies each program. The better executed programs explicitly share the rules of the game, i.e. how often you must shop, fly, or swipe to keep your points alive and available.

Every organization that operates a loyalty program should know by now that it is in the best interest of the customer and the brand to not only disclose the rules, but to provide ample warning of points reaching expiry. Explanation of the actions required to protect point value must be shared in an easy to understand manner.

Two recent personal examples illustrate the contrast in how brands handle breakage. You will see from the examples that there is also a contrasting impact on customer satisfaction and future disposition to repurchase.

I received an email from JetBlue advising me that:

“Your TrueBlue points won’t expire as long as you fly at least once a year. Unfortunately, it’s almost been a year since you’ve flown with us. To make sure you get to keep the points you’ve already earned, just fly with us again in the next 30 days.”

I knew that I had flown with JetBlue on several occasions during the year, but that I wasn’t receiving credit for my mileage due to the disconnect between the naming of my TrueBlue account and the new TSA requirements for passenger identification. I have written about this before and feel strongly that airlines have a golden opportunity to assist their valued frequent flyers in making this transition to TSA compliancy.

Knowing that the process is not easy and that the time needed to request, validate, and receive credit for past flights with reservations in different names would be a poor use of my time, I was resigned to sending an email to customer service.

To my surprise, I received a response within 24 hours informing me that past flights were being credited to me and that my expiration date was extended accordingly. In addition the email made clear how to get my account in sync with TSA requirements and to avoid future discrepancies.

This was a fantastic result and one that renewed my allegiance to the JetBlue brand.

Next, I received an email notice that my ATT wireless bill was due. Visiting the account online to pay the bill, I checked to make sure the recent changes to my wireless plan had been made and that the bill was correct. In a box shown as part of the billing statement I saw this:

Previous Rollover Balance – 10,592
Current Rollover Balance – 1,400
Bonus and Adjusted Rollover Minutes (10,157)

Translated, this was telling me that, in the process of making changes to my account, I forfeited 10,157 rollover minutes. I have been made aware of these rules in the past, but the reality of losing these minutes was never mentioned in my call to customer service to make changes to my account, nor was any gesture of value offered to me for *gasp* trying to adjust my plan to a more sensible and economical setup.

I would say that this transaction lessened my affinity for the ATT brand, but since they trade only on a contractual basis, I suppose it doesn’t matter. What ATT and the other carriers are missing is a huge opportunity to create goodwill across their customer base.

Treating the rollover balance like a rewards currency and proactively offering me something, anything, for losing this truck-load of minutes would have been a wonderful surprise.  Instead, the carrier reinforced my predisposed opinion that I am being held captive by my wireless carrier and, as a prisoner, my rights are non-existent.

Two approaches to breakage and two distinct outcomes on brand affinity, customer loyalty, and future disposition to purchase.

Can you hear me now?

Today was a groundbreaking day for brands that sponsor loyalty and rewards programs.

I woke up this morning and scanned my email. My local coffee shop sent me a free coffee coupon by email and, upon ordering in the store, was able to flash my Android smartphone to the server and cash in my coupon.

Later that morning, I went online to make an airline reservation. Even thought I am known by my middle name, Bill, the airline allowed me to make my reservation for next week’s trip in my “TSA approved name”, the one that matches to my passport, and seamlessly linked my reservation to my frequent flyer account. What a time saver.

Finally, I did a little shopping to buy some fitness equipment online, wanting to take advantage of a special offer received by email today. It all worked smoothly, I got my free training materials to complement the video purchased and walked away charged up for the weekend.

Wait a minute … today is April Fool’s Day ….. that’s right …. none of this happened.

In fact, here is what did happen:

My local coffee retailer #failed in the line of fire. Since I forgot to print out my coupon, I was not given the offer.

My airline was not able to link my familiar name with my TSA name and I spent too much time updating my profile to get credit for my flight.

My last experience turned out better. After drafting an email to customer service and finding the link broken, I posted on the TRX Facebook page asking for help.  I received a reply post within about an hour and ultimately a phone call and email from a customer service representative offering to take my order over the phone while the company corrected some flaws in its shopping cart.

I am loyal to those brands that, even if they make mistakes (we all do) show interest to correct them and remember that customers should be the center of customer-centric strategies!

What about you? Any Loyalty surprises to share on April Fool’s Day?

Every day I play on the seesaw.

It seems like I have one call with a person who expresses doubt about the efficacy of traditionally structured loyalty programs, and then turn around and inadvertently encounter a new program to add to my growing list that I have catalogued and reviewed.

Every seesaw has a balance point.

In this case, the criticism is usually based on impressions formed by poorly conceived programs, meaning I can take it with a grain of salt. On the other hand, the programs I am finding these days tend to lack imagination and justify the loyalty skeptics I meet.

Today I went to freeconference.com to organize a call and was greeted with an invitation to join their newly launched “Loyalty Rewards Program” (yes, they really called it that). The program is simple, earn one airline mile for every dollar spent on premium call services. Participating airlines include American, Delta, and United.

I’m always interested in customer earning velocity as a measure of loyalty program success. From a consumer point-of-view, if you can’t gather enough equity in short order to cash-in for a meaningful reward, the program will be perceived a waste of time.

Free Conference has two key premium services, unlimited recording and storage for $9/month and unlimited desktop sharing for $14.95/month. Imagine if a customer engages both services and spends $288/year. That equates to 288 frequent flyer miles. Let’s be generous and say a premium customer spends about $200/month or $2,400 per year. At that rate, it would take 12.5 years to earn a round trip domestic ticket given a “cost” of 30,000 miles.

Even though the program is free to join, the enrollment form requests credit card information right off the bat, increasing the likelihood of customer disconnect at that juncture.

I spoke with a potential client today who told me his company tried a similar approach to loyalty a few years back and that the slow earning rate turned out to be a club that customers would beat him with on a regular basis. After collecting for a period of time and realizing that the point total was not enough for a $5 gift card, many customers rebelled and the “loyalty” program became a negative from an overall marketing perspective.

There is a truism that I have believed in for some time in this business “loyalty programs are easy to launch, but more challenging to make successful”.  Just about anyone can arrive at a simple construct for a rewards program and to generalize, the more simple the offer, the worse it might end up for the customer.

The old automotive tagline “pay me now or pay me later” comes to mind. It’s worth an investment in program planning and a commitment to execution to make the programs work. Much too often, “do it yourself” only results in customers who go their own way.

Loyalty Truth has been giving a lot of thought towards the shaping of loyalty and rewards programs to engage the interest of Millennials and the broader digital consumer group we are calling Consumer 2.0.

With many merchandise offerings lacking imagination as well as value, and airline miles tough to redeem given capacity restraints on available reward seating, cash back has earned renewed popularity as a quick-to-earn and easy to understand reward.

The problem is, rational can be boring. And easy to understand sometimes means too easy to label. With Groupon offering a 50% off “deal of the day”, a 1% deferred cash reward seems to be teetering on irrelevancy.

A 2010 paper written by an esteemed group of professors from Harvard University, University of Virginia, and University of British Columbia, pointed out that, in most cases, people enjoy experiences over things. While an item purchased can bring temporary pleasure, it is an experience that leaves a lasting impression.

Music is experiential and has been described as a “time machine” by some people. Most of us can attest to the impact of hearing a favorite song on the radio. The opening notes can transport us back in time and bring us vivid memories of first dates, world events, or just plain old good times.

If you don’t believe that music is important to human beings, is pervasive in our culture today and can be used to shape purchase behavior, then at least factor in these statistics:

• MP3 players — Just under half of American adults (47%) own an MP3 player such as an iPod — a nearly five-fold increase from the 11% who owned this type of device in early 2005  – Aaron Smith, Research Specialist, Pew Internet & American Life Project October 14, 2010

• 16 percent of Americans age 13 or older are using devices other than their home computers to download software applications (apps), music, video, and other entertainment content from the Web – NPD Group, May 2010

• 75 percent of iPhone and iPod Touch users are connecting to the Web to download entertainment content and apps – NPD Group, May 2010

Rewards and Music have been linked in an interesting way so far. Several digital content providers, including iTunes, have made forays into the loyalty industry. Reward administrators were asked to pre-purchase exclusively download codes to offer music as a reward, and the redemption process was often cumbersome as it required consumers to leave the brand sponsor’s web environment to collect their music.

To my knowledge, there hasn’t been a fully integrated platform to deliver music and other digital content as a reward until PointTunes™ was announced last year. The platform makes it possible for a loyalty program participant to redeem points or miles directly for music, eBooks, software and games with a patent pending transaction process named PointRobot™.

I had the opportunity to interview the founder of PointTunes™, Bill Cunningham, who shared that PointRobot™ can be used to create a customized digital rewards offering where program administrators have complete control over their digital rewards options.

He told me that PointTunes™ has its origins through his work as a Product Manager for one of the largest employee rewards companies in North America. “During that time I was never presented with a viable digital solution by our vendors” said Cunningham, and “myself and other rewards administrators were looking to add digital reward options to help control costs and find new clients.”

If you understand the shift taking place towards customer engagement, you understand how breakage, while a tempting element of a rewards financial model, can have negative impact on customer relationships. With pressure on reward costs, digital content is attractive to brands sponsoring loyalty programs.

Something had been missing from the previous method of including music as a reward in most loyalty programs and Mr. Cunningham “believes digital rewards is a perfect fit for the loyalty market both from an incentive (do this get that) and a loyalty (points, miles et al.) angle.”

Considering that Consumer 2.0 is perfectly at home with social networks and location based marketing (Gowalla, Foursquare, Facebook, Twitter et al.), using digital rewards that are as mobile as your customers makes sense. To meet the need, Cunningham said a mobile rewards platform is planned for launch in 2011, allowing consumers to redeem for music right from their mobile handset.

Loyalty is evolving to become more social and to meet the needs of the brands that sponsor the programs. PointTunes™ is a group to watch as the “Social Loyalty” continues to unfold during 2011.

I’m sensing a tipping point in how customers relate to loyalty program rewards, and my thinking goes like this: when customers choose which company to do business with, rewards just don’t matter like they used to.

My take is that the classic loyalty reward scheme—earning points toward “hard” rewards for repeatedly doing business with a company—has been trumped by the customer experience. In other words, today’s customer is more likely to opt for a better experience today, than accept a lesser experience that pays dividends down the road.

Lets start with a personal example. I recently cleaned out my wallet of old business and program membership cards. There, I found reward cards for both Borders and Barnes & Noble. Now, I know I have points in both of these programs, but I haven’t engaged with either brand for years. Why? I’ve given all my business to Amazon, which for me offers a better customer experience.

A recent blog by marketing guru Seth Godin points anecdotally to a similar trend toward “experience over rewards” happening in the airline industry. Godin believes that the greater the risk involved with getting a reward—one we have to save for and may never use—the less we value it.

He writes:

Frequent flyer miles, for example, began with the promise that if you flew an airline regularly for months (or even years) you’d get a free flight. The airlines oversold the miles and undelivered on the free flights, though, so the reward started to lose its perceived value—too much risk that you wouldn’t get the prize you wanted. Many of the frequent flyers I know have ceased to ’save up’ and now use their miles for upgrades, moving the benefit closer in time.

Godin’s point is backed up by a recent article in the Miami Herald titled: “Are loyalty programs worth it?” Travel writer Christopher Elliott cites several real-life examples of customers leaving airline programs, because the rewards are just too hard to earn. He points to a recent stat that seat requests for USAir reward flights had an availability rate of 10% and muses, no wonder “there are several trillion unredeemed miles floating around out there”.

In another sign of the sea change, several companies are now offering customers “loyalty rewards” with no points, or long-term loyalty, needed. Take the telecomm space, where both Verizon and Optimum have recently launched reward programs with merchant discounts, special promotions and exclusive content—with no strings attached. Prove you’re a customer and you’re in.

Why is the trend moving toward more automatic and instantaneous recognition of customers? Godin attributes the change to the Internet, stating “one of the many things the web is changing is our focus on now”. I see his point. Now more than ever, today’s consumer wants things at the speed of the Internet, whether it’s information, customer service—or a perk for being a customer.

Is this the beginning of the end of long-term loyalty rewards?

The floor is open. What do you think?

What do chocolate, red wine, credit cards and the internet have in common?

Each offers benefits or represents risks for human beings. And, if you read the results of consumer research on a regular basis, you’ll find that each fills the role of hero and villain depending on which survey results you read.

If you follow nutritional news, you probably have seen studies that indicate on a variable basis that chocolate, red wine and many other food items can yield long term health benefits or cause irreparable harm. Sometimes the more we read, the less sure we can be of what to believe.

The problem is not data. Data Rocks. But the assumptions by which data is collected and interpreted has to be carefully scrutinized for accuracy, sample size, and bias.

A short segment on National Public Radio today got my attention as Ron Shevlin of the Aite Group was interviewed regarding news from the Federal Reserve Bank of Chicago that reward credit cards can cause people to go further into debt.

While the premise of the NPR story makes for great headlines, Mr. Shevlin quickly pointed out potential weakness in the way the study was conducted. Bottom line: be skeptical about survey results which generate breath-taking headlines until you know the whole story.

The second item this week that caught my attention was a story in the Wall Street Journal about the potential linkage between the risk of prostate cancer in men and the length of their index finger. I won’t go into the details as you can read it here.

The most important line in the story for me was this one: “Caveat: Participants self-reported their finger lengths, raising the possibility of error.”

In other words, qualitative surveys based on self-reported information may generate big headlines but are highly vulnerable to one caveat buried below the page-break.

The linkage between these stories and the efforts of marketers to understand how consumers make purchase decisions is clear. We can collect primary research all we want via focus group or survey, but we are wise to validate what people say they will do by transaction data proving what they actually did.

Hanifin Loyalty is adopting a renewed focus on data for the coming year. Data is plentiful in the storehouses of major brands and may be the least leveraged asset in the enterprise. It’s time to fulfill the promise of the data we have collected.

We will soon introduce service offers aimed to optimize the value of data brands collect through loyalty and rewards programs, and to make sure that your data generates business results, not just headlines.

Let’s all resolve to use our data in 2011 to drive business results!

What do chocolate, red wine, credit cards and the internet have in common?

Each offers benefits or represents risks for human beings. And, if you read the results of consumer research on a regular basis, you’ll find that each fills the role of hero and villain depending on which survey results you read.

If you follow nutritional news, you probably have seen studies that indicate on a variable basis that chocolate, red wine and many other food items can yield long term health benefits or cause irreparable harm. Sometimes the more we read, the less sure we can be of what to believe.

The problem is not data. Data Rocks. But the assumptions by which data is collected and interpreted has to be carefully scrutinized for accuracy, sample size, and bias.

A short segment on National Public Radio today got my attention as Ron Shevlin of the Aite Group was interviewed regarding news from the Federal Reserve Bank of Chicago that reward credit cards can cause people to go further into debt.

While the premise of the NPR story makes for great headlines, Mr. Shevlin quickly pointed out potential weakness in the way the study was conducted. Bottom line: be skeptical about survey results which generate breath-taking headlines until you know the whole story.

The second item this week that caught my attention was a story in the Wall Street Journal about the potential linkage between the risk of prostate cancer in men and the length of their index finger. I won’t go into the details as you can read it here.

The most important line in the story for me was this one: “Caveat: Participants self-reported their finger lengths, raising the possibility of error.”

In other words, qualitative surveys based on self-reported information may generate big headlines but are highly vulnerable to one caveat buried below the page-break.

The linkage between these stories and the efforts of marketers to understand how consumers make purchase decisions is clear. We can collect primary research all we want via focus group or survey, but we are wise to validate what people say they will do by transaction data proving what they actually did.

Hanifin Loyalty is adopting a renewed focus on data for the coming year. Data is plentiful in the storehouses of major brands and may be the least leveraged asset in the enterprise. It’s time to fulfill the promise of the data we have collected.

We will soon introduce service offers aimed to optimize the value of data brands collect through loyalty and rewards programs, and to make sure that your data generates business results, not just headlines.

Let’s all resolve to use our data in 2011 to drive business results!