Speak the word Loyalty and you get a range of predictable reactions. If you’re at any number of marketing conferences, the word association game leads to responses of “points”, “miles”, or “discounts”. If you mention loyalty to your friends on the golf course, the reactions range from conversation about one’s dog to “those crummy punch cards” that have been stashed away in a drawer at home.

Because the “L” word evokes such biased responses, thought leaders in our industry have worked hard to redefine the game we are playing. Formal descriptions of “data driven marketing strategy designed to change customer purchase behavior on a sustainable basis” are accurate, though not inspiring. Over the past several years, I’ve move towards Customer Strategy as a broader term that speaks to the need for any company to address the needs of its customer base in a systematic and measurable manner.

My preferred tagline is to say that “everyone needs a customer strategy, but not everyone needs a loyalty program”.

That’s just me, and I have several colleagues who have chosen different paths, either sticking with Loyalty as the descriptor to keep it simple or who have taken up a seat under the big tent of CRM or Customer Management to describe our business.

Then came Twitter. My early web sherpa, The Dude Dean, taught me how to use hashtags effectively among other little pearls of wisdom to create “Google juice”. To create a conversation about our corner of the direct marketing world, it seemed common sense to use #Loyalty after each tweet. Searching on the term a few months ago, I discovered it was time for a change.

#Loyalty denoted a stream of passionate epithets that looked like a painfully assembled chat room for people looking for dating advice. I consulted with other loyalty marketers active in social media and we agreed to use #Lmktg as a way to separate business from personal “loyalty” matters. Thanks to Barry Kirk for his leadership in this effort.

Occasionally though, I check in with the old term to see if anything has changed. Today the #Loyalty Twitter stream offered these bursts of passion for our consumption:

#LOYALTY is the key to a successful friendship or any relationship

show me #Honesty …. ill show u Loyalty

#Loyalty is non existent these days

#Loyalty is so rare these days

Finally I was able to find one Tweet that hit closer to a business related take on Loyalty:

#Loyalty is not about some card an airline gives you for miles. Loyalty is wanting to do business with you, not having to

Reading the comments in the stream, I realized that what these people were talking about is indicative of why its so hard for brands to create long term value with customers. Business has to behave sincerely, as it if really wants to build a relationship, not just manipulate the customer into some form of behavior that is more beneficial to brand than human being.

There are lessons to be learned, even in the Twitter stream. All business owners and managers should revisit the purpose behind his/her marketing efforts. If it is to treat the customer as they wish to be treated, to offer tangible value for repeat purchase, to treat customer data collected like the gold that it is, and to provide customer service to match, then the foundation for success is in place.

If anything less than this, a shift in focus is heartily recommended. Why? Because as the last Tweet of note today said:

The moment you find #loyalty is the moment you’ve found everything!!!

Attending the National Restaurant Association show recently, I solidified some perspectives on social couponing and collective buying schemes in a post here. The buzz from domestic restaurant marketers over how best to leverage collective buying sites such as Groupon, Living Social, Facebook Deals, and the myriad of copycats that have emerged over the past 3 years has been intensified with Groupon’s announcement of its IPO.

Commensurate with news of the IPO were published articles on the “checkered past” of Groupon’s Chairman, Eric Lefkofsky, and new articles documenting Groupon “merchant disasters”. For
restauranteurs and merchants alike, I thought it was time to share a brief guide aimed to optimize your social couponing efforts. If you’d like to learn more or talk in full depth on the subject, feel free to be in touch with myself or Hanifin Loyalty.

There are a series of work phases to engage in order to successfully execute a social couponing promotion:

1. Pre-Planning
2. Operational Considerations
3. Post-Event Evaluation
4. Communication & Next Steps

Pre-Planning
To properly evaluate and offer construct, consider the seasonal time-frame for the offer and build projections and financial models to support back-end evaluation of response profitability.

Include the following items in your consideration set as you build a financial projection for the promotion:

1. Projected number of responses across eligible time-frame
2. Average value of sale
3. Number of customers carried along with coupon event – buyer plus
4. Normal sales, traffic counts for time-frame
5. Gross, net margin
6. Incremental/complimentary sales – up-sell, cross-sell
7. Incremental expense – personnel, cost of goods, logistics, new systems, accommodations/concessions to satisfy customer experience

Operational Considerations
Once a promotion is evaluated and justified, the details of execution must be analyzed. Take these steps to meet with success in market execution:

1. Consider what it will take to support any spike in traffic and customer seating to deliver a consistent customer experience for all patrons. Both patrons whether redeeming a collective buying coupon and paying full price should be accommodated in a manner to complement your brand.
2. Inform your staff prior to the coupon going live so that they know what to expect. Good communications will ensure that your front-line associates are not only prepared for a possible new customer onslaught, but will greet customers with a smile.
3. Address any legal terms and conditions that you want to put into place to protect your return on investment, while maintaining the integrity of your customer service philosophy. Don’t comprise customer friendly and easy/fast/fun just for the sake of running the promotion.
4. Include your suppliers in pre-promotion planning and tactical execution plans to ensure you have sufficient provisions and inventory to meet customer demand. You certainly don’t want to run short on product supply, putting yourself in position to create backorders and issue “make-goods”. Remember this is an opportunity to gain new customers, so be certain you will be able to delight them, in turn encouraging return visit. Do this well and you will hopefully create an army of brand advocates through reviews and referrals via FourSquare and fans/likes on Facebook.

Post-Event Evaluation
No direct or loyalty marketer is worth their skin unless they measure results and know how to do better next time.

Let’s assume you survived what felt like an enormous volume of traffic and that your wait staff reported lots of new faces making a store visit. By all reports, the promotion registered positive results.

Now what? Specifically, what do you measure to gain confidence for the next time?

1. Was there any buzz in the form of reviews or Likes on Facebook?
2. Were there any negative comments on blogs during the redemption time-frame that related to the offer?
3. How much was redeemed and what was the breakage rate?
4. What tender was used for payment?  This helps for future promotional tie-ins with credit card issuers.
5. Can you tell who redeemed, how many customers were new, how many have returned for second visit?
6. Did you meet or exceed your financial projections?  Was it a positive return on investment?

Communications & Next Steps
The cardinal sin in social couponing is to be “one and done”. To build sustainable impact for the business, you must commit to doing this more than once.  What did you learn from your first dive into the deep end of the pool and, assuming you didn’t drown, what’s next?

1. Leverage insight on those who redeemed and adapt or personalize your e-mail communications to take advantage of what you learned. Make all communications as relevant as economically possible and as your data permits to improve open rates, click-thru in order to see new profitable transactions.
2. Are any new customers acquired having a birthday soon? Any new customers acquired having an anniversary or special event (graduation, etc.)? What will you do to create a stronger relationship with these folks?
3. Adjust the timing of the redemption window to best suit your seasonal traffic patterns
4. Gain new insight by incorporating a link to a survey page so you can learn more about your customers and other members of their household
5. Support franchisees with personalized communications custom to their location
6. Consider incorporating community events into your next wave of digital couponing. Choose from events unique to your location, whether music, promotional giveaways tied to beverage partners, or something else.
7. Adapt learnings from the coupon event to test/learn on new offers. Consider changing the threshold offer spend or offer something free. In either case, base your numbers on what was observed in the last transaction

Beyond good execution of your collective buying experiment, think about how you can use the platform to create additional offers that will strengthen customer engagement and build longer term customer loyalty. For restaurants, you might consider offering a complimentary benefit for dining with you again, or create a package offer with music or entertainment partners in the area.

Collective buying isn’t a strategy, it’s a tactic that, when solidly executed, can yield good results for a business. Following these steps in planning and execution will improve the chances of success and create a foundation for future promotional enhancements.

If you are a sports fan and have a favorite team, today is the day to let the world know. You might gain some cash in the process as well if you play the game here on National Fan Day.

When I was traveling in Latin America a few years ago, someone pointed out the real meaning of Loyalty to me through a closer look at the Spanish language. The literal translation for “Loyalty”  is “lealtad”, but the word used by folks in daily language to describe Loyalty Marketing Programs is “fidelizacion”.

The difference? True loyalty is that heart-felt emotional attachment to our faith, our country, our families and loved ones, even our dog. Fidelizacion referred to the temporary brand affinity caused by well designed incentive programs. I won’t go into it further now, but think about the difference between unconditional love (true loyalty) with the other type we know and love commercially as one that has to be continually fed by smart communications laced with incentives.

One other recipient of our “real” loyalty is our team. I grew up in Cleveland and withstood every joke ever written by late night host stand-up guys as I rooted for the Browns and Indians through disappointing seasons, “Cardiac Kids” and a few gut-wrenching disasters. I still love ‘em both.

Fans are fans and today is the day to get out and show your sports-love to your favorite team. The good news is that by simply having a little fun and giving props to your favorite team, you can take advantage of some great deals that are available only on National Fan Day.

The program is offered by My Fan Rewards and the timing is perfect as fans everywhere try to focus on the fun in the game and forget about lock-outs and collective bargaining agreements for at least a day. Let your friends know about National Fan Day by updating your Facebook status and dropping a comment on the National Fan Day FB page.

It’s the weekend, have some fun. You deserve it.

The continuing battle over the regulation of interchange has yet to hint at a winner. The battle lines are clearly drawn and each side of the debate between banks and retailers makes a sensible case, until you read the opposing view. For the average consumer, that is exactly the problem.

At first blush, many consumers may soften to the argument made by retailers and others who favor the legislation. The banks are painted as evil, wicked, mean and nasty and their excessive swipe fees are portrayed as a tax that is about as fat as Wall Street bonuses.

Before the retailers are able to firm up a victory, the banks make solid points that retailers in other markets, Australia is the favorite one cited, did not share their savings on interchange by lowering prices. Worse yet, the banks make clear that they will have no choice but to raise fees on all sorts of checking and savings accounts to make up for their diminished margins. Even Russell Simmons has joined in to advocate for the bank position.

Who is speaking is almost as interesting as what is being said. Every public dispute has a spokesperson, and JP Morgan Chase has either volunteered or has been elected by the others. Even though PNC, Regions, and SunTrust have announced attenuated benefits with their debit card rewards programs along with Chase, it seems to be Chase that is leading the campaign to scare the wits out of consumers based on Durbin being implemented as currently proposed.

Follow this timeline with me for a moment

• On January 14, industry news outlet PaymentsSource reported that Jamie Dimon, CEO of JPMorgan Chase, told stock analysts during a quarterly earnings call that up to 5% of banked consumers might be forced out of the system if financial institutions raised fees to make up for the proposed reductions in debit card interchange
• On March 10, industry sources reported that Chase and possibly other big banks were considering a cap on debit card transactions of $50 or $100
• On March 15, Chase announced it was terminating the Chase Ultimate Rewards program due to pending Durbin passage
• On April 15, Chase announced that is was not planning to discontinue Ultimate Rewards in light of the federal government’s decision to delay enactment of interchange fee cap rules

This series of announcements may unfairly paint Chase as a manipulative bad guy in a fight where surely other banks are standing behind the curtain and cheering them on. Regardless of the messenger, the message itself is confusing and a bit frightening for consumers. Is it enough to make them call their Congressman and lobby for the bank’s point of view?

Interestingly, the retail lobby has managed the fight through associations and has kept any one retailer from standing in the spotlight. This tactic might tell you how vulnerable every retailer feels at the moment. The economy continues to recover and none of them wants to be the “voice of the industry” – and subsequently the target of consumer ire.

Watching this battle unfold is like being a bystander at your parent’s divorce. The arguments all too often spill out into public and the selfish interests of each parent seem to overwhelm the welfare of the children. American consumers, those that are following and understand the substance of the debate, are gathering the idea that their interests are secondary in this brawl.

It might be time for the two “parents” to empathize with the damage being inflicted on the “children”. It is possible that regardless who wins this fight, consumers will dig their cynical heels in further, making “loyalty” a very difficult task to achieve.

I woke up yesterday with enthusiasm for the day. It was St. Patrick’s day. Whether you have any real “green” in your blood, its a festive day to be sure.

Going though an inbox full of messages, I found an offer from a local coffee shop offering a free coffee with purchase of a breakfast sandwich. It was simple and straightforward, but caused me to make a slight detour on the way to the office to take advantage.

After ordering, I showed the coupon on my smartphone to the counter-person who promptly told me that I needed to have printed and presented the actual coupon to take advantage of the offer. Only due to my cheery nature at that time did I politely change my order to a coffee and leave.

Meanwhile, the Loyalty Asterisk™ was dancing in my brain while my loyalty antennae were on high alert. Small business and local merchants are striving to have their voices heard. Email marketing is an inexpensive way to connect with local customers and create repeat visits at low cost. These merchants have the tools, in this case Constant Contact, to deliver the messages, but many times don’t know how to execute to make the customer experience reinforce the offer.

A few thoughts:

1. In a world with increasing smartphone penetration, why would a merchant need to do anything other than see the coupon in vivid color in the customer’s hand?
2. “Going green” is not only sensible, but a positive sweetener for many brands. Why force a customer to print more paper that gets reviewed once and placed in a drawer?
3. When misunderstandings occur, why not allow the customer their promotional reward, rather than smacking them on the wrist?
4. If the owner was worried about fraud, I could have calmed his worries in three easy steps.

If we insist on speaking that “the devil is in the details”, then we should equally agree that “there is glory in flawless execution”.  Merchants need to complete their planning cycle and think through how a promotion plays out at the counter.  When they do, they will witness their customer satisfaction reaching new heights.

Cartera Commerce, until recently known as Mall Networks, and Vesdia, long ago known as Baby Mint, have announced a merger that will change the supplier side of the merchant funded loyalty landscape.

Or will it?

Like my reported allergy to penicillin, someone told me long ago that there was no such thing as an original idea. I’m not sure if either statement is true, but if the latter really is the case, then the U.S. Patent office should close its doors and all the filers of new business process patents should just focus on better execution rather than fencing in their intellectual property from others.

Merchant funded loyalty was an “original idea” only about 6 years ago. In that distant and ancient age, Vesdia and Affinity Solutions were the two pioneers who laid claim to birthing the concept and in my book, it has been Affinity Solutions which has best developed and executed the concept over the years.

Merchant funded loyalty programs were born of “the necessity” also known as the Walmart litigation against Visa and MasterCard. That litigation was settled in 2003 and ultimately caused the associations to pay Walmart and other retailers enormous sums of money.

In a uniquely 21st century evolutionary pattern, merchant funded programs were deployed rapidly across the debit card portfolios of major card issuers in the U.S. and multiple competitors joined in the game. Within a short 4 years or so, merchant funded programs evolved from innovative and industry-saving strategy to table stakes for savvy debit card issuers.

That’s good for business, but some trimming of the competitive group was inevitable as pricing and demands for innovation placed pressure on the supplier group.

The re-branding of Mall Networks to Cartera is partial acknowledgement that suppliers needed to expand their branding and capabilities set. The merger of Cartera and Vesdia is further testimony to the ongoing consolidation in this sector.

With the Card Act of 2009 implemented last year, and the Durbin Amendment on the way, card issuers will continue to pay attention to providers which deliver valid consumer value propositions for their cards at a manageable cost. There is plenty of room for growth in debit card rewards and in the broader rewards and loyalty markets.

Due to my affiliations throughout the supplier side of the loyalty marketing business, I will hold further comment on this merger for the moment.  Let’s just agree that this space deserves watching, and the significance of this merger will be better understood as 2011 continues.

Cartera Commerce, until recently known as Mall Networks, and Vesdia, long ago known as Baby Mint, have announced a merger that will change the supplier side of the merchant funded loyalty landscape.

Or will it?

Like my reported allergy to penicillin, someone told me long ago that there was no such thing as an original idea. I’m not sure if either statement is true, but if the latter really is the case, then the U.S. Patent office should close its doors and all the filers of new business process patents should just focus on better execution rather than fencing in their intellectual property from others.

Merchant funded loyalty was an “original idea” only about 6 years ago. In that distant and ancient age, Vesdia and Affinity Solutions were the two pioneers who laid claim to birthing the concept and in my book, it has been Affinity Solutions which has best developed and executed the concept over the years.

Merchant funded loyalty programs were born of “the necessity” also known as the Walmart litigation against Visa and MasterCard. That litigation was settled in 2003 and ultimately caused the associations to pay Walmart and other retailers enormous sums of money.

In a uniquely 21st century evolutionary pattern, merchant funded programs were deployed rapidly across the debit card portfolios of major card issuers in the U.S. and multiple competitors joined in the game. Within a short 4 years or so, merchant funded programs evolved from innovative and industry-saving strategy to table stakes for savvy debit card issuers.

That’s good for business, but some trimming of the competitive group was inevitable as pricing and demands for innovation placed pressure on the supplier group.

The re-branding of Mall Networks to Cartera is partial acknowledgement that suppliers needed to expand their branding and capabilities set. The merger of Cartera and Vesdia is further testimony to the ongoing consolidation in this sector.

With the Card Act of 2009 implemented last year, and the Durbin Amendment on the way, card issuers will continue to pay attention to providers which deliver valid consumer value propositions for their cards at a manageable cost. There is plenty of room for growth in debit card rewards and in the broader rewards and loyalty markets.

Due to my affiliations throughout the supplier side of the loyalty marketing business, I will hold further comment on this merger for the moment.  Let’s just agree that this space deserves watching, and the significance of this merger will be better understood as 2011 continues.

Relationship Banking is making a comeback with the launch of Regions Relationship Rewards this  past summer. The $137 Billion asset bank ranked #3 among 11 banks in the Southeast region of a JD Power survey on customer satisfaction, but was facing some challenges as the survey footnoted their ranking this way; “customer loyalty and perceptions of brand image among retail banking customers continue to decline, while satisfaction has leveled off.”

Seeking to engage customers and encourage them to consolidate their banking relationship with Regions, Relationship Rewards was announced in June 2010 with the brand promise “To thank customers for their business” and the tagline “the more you bank, the more you earn”.

Anyone with one of three checking accounts (business or personal) is eligible to enroll in the program as long as they also have an active Regions Visa CheckCard to boot. Customers can enroll across multiple channels including toll-free call center, program website, or via the online banking application. Interestingly, the branch was not used to enroll customers.

Points are earned by making signature based purchases with a Regions CheckCard and, as is the norm in debit card rewards schemes, no credit is given for PIN based purchases. The earning rate per dollar spent on the check card varies by type of customer with Consumer checking holders earning 4 points/$ while Business customers earn 2 Points/$ and Private Banking customers earn 1 Point/$.

Bonus points are awarded based on how many products are owned by the customer and the level of average balances held in deposit accounts.

Program rules are simple and reasonable. There’s no annual fee to join Relationship Rewards and no cap on points earning per year. Points expire 36 months from the date earned and customers which close accounts in good standing have 90 days to redeem their points.

Based on two sample customer scenarios that I tested, the first a lighter debit card user with lower average balances ($250/month and Avg Bal $2,000) and the second a heavier debit card user with high average balances ($2,000/month and $50K), annual reward value could be accumulated between $90 – $385.

Considering that points are valued between 50 – 100 basis points, the light user could redeem for a one free wire transfer fee, a $100 Visa gift card, or a Wet/Dry Shop Vac. The higher earner could walk away with a bicycle, $500 gift card, or a Bose Sound Dock.

Rewards are available in four categories, merchandise, gift cards, bank rebates and travel.  There is no lack of reward choice and it appears the most value can be found by redeeming for free bank services.

A few observations from my review:

• Even though this program is created to encourage broader relationships and higher account penetration per customer, most of the value that can potentially be accumulated by customers comes from the debit card spend.
• The highest reward value can be found through reduced fees on bank services. Whether customers will find compelling reason to consolidate their banking with Regions to earn a free wire transfer fee, or pay for a safe deposit box is questionable.
• Including a redemption option for NSF (returned check) fees is bad form. I know bad things can happen to good people, but who wants to cash in points to pay for an overdraft?
• The travel rewards offer no-blackouts, and cash and points can be combined to earn rewards. Both are good features for travel rewards in today’s market.

Regions Bank Relationship Rewards is a solid entry into the retail banking market and follows TRB best practices closely. I’ll look for any results published and update those in Loyalty Truth when available.

The Mega Event wrapped up last week in Montreal with the first annual presentation of the Mega Awards honoring the best in airline frequent flyer programs (FFP) and a second day of presentations that covered social media, coalition marketing, and a keynote which unveiled the term “Trustability” from Don Peppers.

Mega Awards were conceived to recognize marketing campaign and product development excellence in the airline industry covering Loyalty, Social Media, and Ancillary Revenue.Freddie Laker hosted the awards evening. A founder of Sapient Nitro and son of legendary airline innovator Sir Freddie Laker, he was so entertaining that an ESPY hosting gig might be in his future.

You’ll have to visit the Mega Awards web site for all the details, but here are three highlights that stood out for me:

Best Merchandising Product
Wessco International won top honors here for creating a co-branded offer that bundled a $10 off $30 coupon for Bed Bath and Beyond with a blanket and neck pillow package sold on board American Airlines. With airlines fracturing the flight experience and turning each piece into a revenue opportunity, passengers need a little incentive to play the game. American Airlines trialed the BBB coupon on its flights and sold over 200,000 units in 6 months, creating ancillary revenue for AA while giving travelers more coupon value than the cost of the blanket and neck pillow kit.

Best in Airline Social Media
Air New Zealand created its AirPoints Fairy as a flighty persona that listens to customers and often grant their wishes – all through the AirPoint Fairy’s Twitter account. There was lots of innovation in this category with Lufthansa’s MySkyStatus allowing people to stay connected within their networks during travel and Volaris and airBaltic using Facebook pages to deliver messages about special fares and generate big chunks of incremental revenue. ANZ leveraged its program to set it apart from competition and illustrated how social media could be used to drive tangible results.

Best in Airline Loyalty
A tough category to judge with many worthy entrants, Velocity, the loyalty program of Virgin Blue, came out a winner. Locked in a dog-fight with rival Qantas, Virgin Blue had 60 days to create and execute a campaign to protect its frequent flyer base in light of market changes impacting how banks would allow consumers to use their credit card rewards points.

The promotion was multi-faceted and included an immediate 25% bonus point award to transfer points to Velocity as well as the chance to win 25 million points – the biggest rewards based prize ever offered in Australia. 25 million points equated to a chance to go into space on the highly publicised Virgin Galactic space ship.

Using the creative premise that Velocity was offering ‘average Joes’ the chance to go into space the campaign told the story from the “civilian” side and that of a disgruntled astronaut. The fictitious astronaut, Sgt Major Scott Petersen, protested in a YouTube video that “space is not for amateurs” and circulated petitions via Facebook pleading for support against “this crazy Velocity promotion that will let mere amateurs go into space”.

The promotion achieved the overall goal of shifting a key segment of bank card point collectors to the Velocity program and notched a 1605% increase in points transfers compared to a non-campaign period.  Points transferred per day increased by over 850% compared to a non-campaign period and approximately 400,000 visitors were attracted to the micro-website.

All costs accounted for, the promotion returned an outstanding 10:1 ROI, enough maybe to even pacify that angry astronaut.

I don’t usually include conference reports as posts in Loyalty Truth, but the quality of content shared by key persons in the airline / banking / loyalty industries during the first day of the Mega Event was so strong that I make an exception.

Rupert Duchesne, President Groupe Aeroplan kicked off the day by talking about – what else ? – The Future of Loyalty.  He noted 3 key trends that in his opinion, will define the business going forward:

1. Duchesne borrowed from an article written earlier this year by Google Chief Economist Hal Varian and stated that the Rise of the “Datarati” would define the winners among operators of frequent flyer programs (FFP). In simple terms, he made clear that the companies which use the data they have collected effectively to drive marketing efforts will come out on top. We agree here in Loyalty Truth.
2. Credit card rewards programs will continue to be under pressure. With the passage of CardAct 2009, the Code of Conduct in Canada, and the looming Durbin Amendment, life as a credit card marketer will continue to be challenging in 2011 and beyond.
3. There will be an Evolution of how Best Customers are defined. Companies will go beyond the typical Recency, Frequency, Monetary Value equation and add Social Influence (using things like a Klout score). Duchesne cited ShopKick and Social Rewards as examples of outfits that are bringing this idea to market.

Lance Blockley, Managing Director Edgar Dunn & Company contrasted Co-branded credit card offers linking “direct” to FFP programs and those credit card offers that consolidate multiple travel awards rather than linking with just one airline, offering up some insightful distinctions between the two models.

The panel discussing “Lessons from the recession” was a pleasure for me to moderate as we had 4 stellar panelists with Air Jamaica and Virgin America represented. Dr. Ricardo Pilon explained how airlines need to refocus their objectives and think about the holistic nature of customer loyalty to meet future challenges. Brett Billick, Virgin America emphasized that airlines should keep the focus on the product, not on the loyalty program itself. Angela Brissett-Martin, Air Jamaica offered a great case study of how the airline reached out to their highest tier flyers to make sure they stayed “on board” during the recent merger with Caribbean Air. Jef Harris added that airlines have to balance their ancillary revenue strategies with overall loyalty strategy.

A panel discussing the new IFRIC 13 standards for managing liability from FFP’s brought new perspective to a subject many would prefer to avoid. Instead of thinking of the value of unredeemed mileage as “liability”, Mikund Srinivasan from Emirates / Skywards suggested that we consider the money socked away to be a current asset that can be used to fund program improvements. Mike Hemsey, President Kobie Marketing, preferred the term “deferred revenue” and reminded delegates that high redemption equates to strong engagement and strong incremental revenue growth.

The day wrapped up with Simon Hickey, CEO Qantas FFP, who talked about how the airline formed its coalition style program and the results it has generated. Earlier in the day, Duchesne had stated that Loyalty was important as Qantas had registered all of its profit last year from two sources: its FFP and low cost carrier, so you knew that Hickey’s story would be a good one.

During the presentation, Hickey announced the airline’s new iPhone app and emphasized that Customer Engagement was key to future success. He wrapped up by predicting that Loyalty would be “the growth industry of the next decade”.

I think I have to agree!