20 years of loyalty innovations examined
Among the major customer loyalty marketing milestones achieved in the past 20 years are the birth of coalition loyalty programmes and the extension of rewards and benefits to non-purchase behaviours, according a report in the latest issue of Colloquy magazine.
Some of the loyalty marketing industry's evolutionary highlights since 1990 have included:
- 1990: The proliferation of the branded rewards credit card begins as AT&T introduces its AT&T Universal Card
- 1991: The first example of large-scale, word of mouth rewards marketing occurs with MCI's Friends & Family programme, which encourages customers to recruit new members in return for awards
- 1992: The rise of two-tier pricing - a watershed moment for grocers - takes place when Vons supermarkets offer in-store savings to Club Card members
- 1994: Airline miles become profit centres as carriers discover their programme miles can be used as promotional currency by hotels, restaurants, credit card and car rental companies
- 1997: The gaming industry fully embraces loyalty marketing as Harrah's Total Gold debuts
- 2001: America's first coalition programme to gain national attention arrives in the form of Upromise, which partners with corporate giants to help students and their families plan, save and pay for college education
- 2005: Big US banks begin to embrace debit loyalty with Bank of America's Keep the Change, a programme that rounds up members' debit purchases to the next dollar and deposits the difference into a savings account
- 2006: Word of mouth is harnessed by loyalty marketers in order to transform consumers into brand ambassadors after the broad acceptance of social platforms such as Facebook and LinkedIn
- 2009: Smartphones promise loyalty marketers new ways to engage with on-the-go consumers and enable real-time options for mobile rewards, payments and commerce.
"Before 1990, airline and hotel frequency programmes dominated the loyalty industry," said Colloquy partner Kelly Hlavinka. "Credit card programmes were a novelty and retailers were still sorting out their strategies."
According to Hlavinka, out of all the customer loyalty developments seen since 1990, the most significant begin with the introduction of loyalty's 'killer app' - the coalition programme - followed by the extension of rewards and benefits beyond purchase behaviours into non-purchase behaviours (first seen with MCI Friends & Family, and more recently in harnessing word of mouth communications in the social networking environment).
Another key development, without a doubt, has been the emergence of what Colloquy calls 'Enterprise Loyalty', in which companies began to use customer data from their loyalty programme to transform the customer experience, product mix, pricing strategies, and other operational efforts.