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.

Follow me …….

Being a player in our new digital age is akin to being the catcher in a knife throwing act at the county fair. It’s exciting, and cool that you can keep up the pace, but will the end game work out in your favor?

Both games are fast paced and just a little dangerous. The pace of introduction of new web based applications, communities, and services never seems to let up and the merit badge of those “in the know” is expressed by their ability to dissect the latest phenom, master it, and then declare it nearly passé as they go on all night vigil waiting to coin the next great thing. The danger in playing is not physical, so you can relax on that count. The risk is that while we are chasing the rabbit in this blistering race, we can easily lose sight of why we are running so hard.

The rapid progression of Web 2.0 offerings MySpace, Facebook, You Tube, and Twitter are example enough. According to Business Week, the most well known social network in 2005 was Friendster. With multiple generations of social networking in play, it’s safe to say things have changed.

Marc Andreessen, of Mosaic and Netscape fame, is behind Ning, a platform that allows people to make up their own mini-MySpace. Speculation abounds that instead of one of the established social networking platforms dominating an industry consolidation, there may be a big bang in our digital future with the resulting fragmentation translating into everyone having their own micro-mini network.

While I do hear people asking questions about how this will play out, I don’t hear them asking the important question – what tangible benefits do I get from social networking and how much time do I have for it? In short, we should be looking for the drivers of desirable behaviors, rather than “twittering” about which glob of mud thrown against the wall will still be worth our time in two years.

For the majority of the connected population that still finds sleep useful, decisions will be made of how best to allocate our digital mind space. Life online still has competition with TV, music, movies, meals, work, and families. While it’s fun to have a profile on LinkedIn and pages on MySpace and Facebook, we will eventually make choices as to where we get the most benefit from time invested and pare down the number of engagements we maintain online.

Don’t misinterpret my take here. Social networking is an awesome concept and has benefits for its participants. I just find it interesting that the web started off with bulletin boards and forums and now envision that we could return full circle to an environment where people match up with others on increasingly granular subject matter. Where the commercial benefit resides is not yet clear, but so far it looks like the participants stand to receive greater benefit as they can short-cut rolodex networks and bring efficiency to their business and personal lives.

It may be that the next great thing will be found in the madness itself.

Just like Executive Book Summaries, which offers summaries of business books to save time and money for their subscribers, maybe a clearinghouse application that aggregates and filters multiple networked memberships will constitute the most hip home page that you can add to your browser.

Or, maybe it’s already out there and I just haven’t had the time to find it! >>> Bill Hanifin