Customer loyalty's future lies in 'trustability'

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By: Wise Marketer Staff |

Posted on November 5, 2010

Customer loyalty's future lies in 'trustability'

The recent 'Mega Event' loyalty conference in Canada brought together executives from the airline, banking, and loyalty marketing industries to reveal new insights into the state of the airline business, with Rupert Duchesne, president for Groupe Aeroplan, starting the proceedings by talking about the future of loyalty.

The Wise Marketer's contributing editor, Bill Hanifin, reports that Duchesne's observations centred on three key trends which, in his opinion, are set to define the airline business in the future.

First, he explored what has been termed 'the rise of the Datarati', suggesting that airlines that use the data they have collected through FFPs to more effectively drive their marketing efforts will be more successful than those that fail to do so.

Second, Duchesne warned that credit card rewards programmes will continue to be under pressure. With the passage of Card Act 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.

Finally, there is likely to be a continuing evolution in terms of how marketers define their 'Best Customers'. Duchesne predicts that companies will go beyond the usual recency, frequency, monetary value (RFM) segmentation and add a fourth dimension, Social Influence, using things like a 'Klout' score. He cited ShopKick and Social Rewards as examples of companies that are already bringing this idea to market.

A panel discussion entitled 'Lessons from the recession' featured four panelists, with Air Jamaica and Virgin America being 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 of Virgin America emphasized that airlines should keep their focus on the product, not on the loyalty programme itself. Angela Brissett-Martin of Air Jamaica presented a case study showing how the airline reached out to its highest tier flyers to make sure they stayed loyal during the airline's recent merger with Caribbean Air. Jef Harris added that airlines also need to balance their ancillary revenue strategies with overall loyalty strategy.

Simon Hickey, CEO for Qantas' frequent flyer programme, also discussed how the airline formed its coalition style programme, and the results it has generated (surprisingly, Qantas registered all of its profit in 2009 from two sources: its FFP, and its low cost carrier). During the presentation, Hickey alsounveiled the airline's new iPhone application, and emphasized that customer engagement was the key to future success. He concluded by predicting that customer loyalty would be "the growth industry of the next decade".

The big trust issue to come... Don Peppers delivered the closing keynote presentation which presented a call to action for brands wishing to build customer loyalty and improve customer satisfaction. Peppers talked about building customer loyalty in the context of digital media, a world that is largely untamed today and which stands to unleash further surprises on both consumers and businesses over the next few years.

In simple terms, he argues that winning brands in the future will build "trustability" - a strategy which more often than not will mandate making a short term loss to achieve a longer term gain. Corporate executives who remain entranced by quarter-to-quarter delivery of numbers to meet the expectations of investors may therefore find trustability to be an elusive commodity.

Peppers emphasized that brands do not have the option to treat customer service like an item they put on sale at the end of every quarter. Customer experience has to be delivered with sincerity and through employees who have either the power to make decisions on the spot or have access to systems and supervisors who are nimble enough to respond in real time to defuse customer concerns.

From a loyalty perspective, trustability means that breakage is the enemy. Customers don't want their hard-earned miles and points wiped out through fine print in the programme's rules.

Peppers concluded by arguing that loyalty and profitability are simply different sides of the same coin, and that tweaking programme rules to trigger short term gains would negatively impact customer loyalty over the longer term. The United Mileage Plus campaign that promises to be "the programme that wants you to use your miles" is a good example of how to create trustability through a loyalty programme.

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