35+27+10 = 3.0

Here’s an overview and preview of our new white paper, Loyalty 3.0

Thirty-five years ago, American Airlines launched AAdvantage and the era of modern loyalty marketing began. Loyalty 1.0, in Y2K speak. United Airlines launched Mileage Plus the week following, basically replicating AAdvantage. and initiating the first wave of largely undifferentiated loyalty programs. The difference then was relationship marketing.

Twenty-seven years ago, flying Midway Airlines to Chicago for interviews with Leo Burnett, I ended up not at Burnett but leading frequent flyer marketing at Midway, which embodied a customer-centric culture and spirit of service too seldom seen. Around that time, American Express funded triple miles on Delta Air Lines’ Frequent Flyer program, serving as a catalyst for modern loyalty marketing and strategic partnerships, the harbinger of Loyalty 2.0. Yet even with social and mobile, Loyalty 2.0 has not moved beyond transactional loyalty. Worse, there’s less relationship marketing than ever.

Ten years ago, we started rDialogue (since “Relevant Dialogue” was a mouthful) because it was clear that relevant dialogue was required to build sustainable customer relationships and customer loyalty. And it was, and still is, largely missing in the market.

Today, loyalty marketing is at a crossroads. Loyalty marketing is mainstream, with more than 3 billion loyalty program memberships, an average of nearly 30 per household, up from 24 two years ago. Yet, at the same time, there has been a 20% decline in memberships among the global affluent. This audience is disengaging from loyalty programs and it is plainly due to a lack of relevance (to members) and a corresponding lack of differentiation among the offerings.

As we’ve stated ad nauseam: loyalty programs and loyalty marketing are not the same. True to our mission of “making the world better for customers and the brands that care about them,” we are once again calling for fundamental change within loyalty marketing. We’ve long encouraged more customer-centricity, integrating loyalty strategy into the business strategy, with more innovation, especially in how big data should be used to drive relevance. Four years ago, we published “The Revolution Will Not Be Televised” and in 2014 we advocated for a shift from loyal customers to loyal brands. Last year, we addressed head-on the notion of whether loyalty was dead and whether “customer experience is the new loyalty.” Reminder: it is.

Now we are focused on Loyalty 3.0, where big data, new technologies and the right investment priorities (i.e., leadership) should allow brands to optimally “pay attention to customers and act accordingly.” No company represents this concept better than Amazon; hence, we also refer to Loyalty 3.0 as “Amazonification”.

Loyalty 3.0 is not for every brand or company, nor is there a flash cut to make a leap from Loyalty 1.0 or 2.0 directly to 3.0. But if more brands don’t soon evolve in this direction, the negative trends we are seeing in the market will not reverse, they will accelerate.

Customers don’t have patience, as Amazon has known since WWW stood for the “world wide wait”. Increasingly, we don’t believe that investors have patience either. Loyalty marketing, in all forms including 1.0, are increasingly part of Wall Street’s optics, which ultimately is a good thing.  For loyalty leaders.

Please join us on this journey to Loyalty 3.0 and beyond. For more of our thinking, please click here and download our new white paper. Let us know what you think and let’s continue the dialogue.