This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

July 25, 2007

The Future of Customer Loyalty

Driven by consumer behavior, in the future, we will see some interesting changes in the field of Customer Loyalty Programs. The megatrend towards globalization will have two major effects. First, international borders will no longer be the dividing lines that we see today. We will see more worldwide and macro-regional programs, as opposed to today's that are country-centric. Second, globalization will mean that customer loyalty will be more difficult to develop, because consumer values are shifting.

Innovators using technology to be "up-close and personal" will reap the rewards of their investments. Years ago, Peppers and Rogers talked about our one-on-one future. That future is here today. Marketers not embracing these leading-edge technologies will find themselves at a disadvantage. These technologies include RFID and EMV-based smart credit cards. The latter are the new combination of credit/debit cards that feature contact-less payments. These new smart cards include chips that allow payment without swiping or signing.

Speaking of technology, we will see an increasing use of analytics to figure out what's really working and what's not. This analysis will extend to Lifetime Value calculation, so that marketers will be able to work smarter with the same investments.

Consumers will vote with their time and their dollars and marketers will reward them in kind. Gone are the days when everybody got something for just signing up; there are still a few of those programs, but fewer and fewer.

Tapping into psychographic or population segments, i.e., lifestyle and lifecycle segmentation, we will see more and more rewards customized to the specific cohort. This shift will mean tickets to rock concerts for the young adults and discounted cruises for the seniors. And expect to see more combinations of points and money to buy items that ordinarily would have been "out of reach".

Expect to see ever-increasing innovation and ever-more-sophisticated consumers who will expect growing levels of personalization and customization. Marketers choosing not to embrace these trends will find themselves at a distinct competitive disadvantage.

Special thanks to loyalty guru Peter Clark, co-author, "The Loyalty Guide," Volume II. Purchase chapters or the entire 950 pages.

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