Top 10 Loyalty & CRM Predictions For 2014

Olson 1to1 takes a look at the year ahead.

Real Time Marketing Goes Mainstream on Twitter

Accelerated by its IPO, Twitter becomes the official real-time social medium. Marketers get busy trying to figure this out, with some awesome winners sprinkled in with a lot of awkward failures. Twitter doesn’t judge, watching its ad revenues climb nicely.

Consumers Don't Answer Mobile Payments' Call

ISIS’ national mobile payments launch will fall flat, highlighting the challenges in getting multiple competing interests—phone companies, banks, associations, handset manufacturers, merchants and so on—to cooperate. But we knew that. The lack of meaningful consumer advantages—especially loyalty-related—make it DOA, and ISIS should have known that. Adding static, NFC’s position as the technical standard for mobile payments is thrown into serious question. Meanwhile, less ambitious mobile payments efforts such as those from Starbucks, Square and PayPal continue to grow.

Frequent-Flyer Programs Become Revenue-Based

Sun Country, Southwest, Jet Blue and Virgin America have all made the switch to fully revenue-based programs. Delta and United have added revenue-based elite qualifying requirements for 2014 and American will surely follow. (Note the awesomeness of the small carriers leading the large ones). One thing’s certain: Low-cost mileage runs to earn elite status are over. Whether the majors adopt full revenue-based programs is an open question, but by year-end we should expect these revenue requirements to increase, giving them a powerful lever to protect the super-elite members, penalize members who travel enough—but don’t pay enough—for elite status, and squeeze the middle class.

Loyalty Gets Fashionable Among Retailers

Retailers get smarter about loyalty, designing programs with fewer barriers that maximize enrollment, tracking and member insight, then leveraging the promotional side of the house to drive behavior with highly targeted offers, services, discounts and special access experiences that effectively become the program value proposition, and increasingly serving it all up through mobile and social channels. This type of convergence makes select retailers a model for how to get loyalty right.

Coach Class Seats Shrink to Make Room For Aisle Cart

Seeking new sources of revenue, the major airlines will successfully leverage their ancillary services pricing strategy and start aggressively mining the information they have on members to sell them things only loosely related to travel. Think of the possibilities associated with knowing who checked golf clubs. The lowly aisle cart is transformed into a handsome profit center. While it won’t happen in 2014, watch for the major airlines to apply this same strategy to their frequent flyer programs, partially deconstructing them, replacing an all-you-can-eat set of base or tier benefits with an a la carte one, but positioned to members as offering a set of choices tailored to their needs.

Loyalty And Mobile Payments on the Menu at QSRs

While QSR loyalty has been on the rise for awhile, two industry heavyweights will up the ante and cause the industry to respond. Trying to keep pace with Starbucks, where one in four customers is a member of its loyalty program, Dunkin’ Donuts is relaunching its DD Perks program on mobile and will aggressively promote it in 2014. And trying to keep pace with the industry growth overall, McDonald’s, forecast to grow at only half the industry rate in 2013 (2.4% vs. 4.9%), will roll out its loyalty program—currently in pilot—nationally. A common feature of these programs will be mobile payments and overall operational speed and simplicity at POS. The QSR industry will follow suit, but smaller players will give the big dogs a few surprises along the way with unique engagement strategies.

Loyalty Programs Seek More Experience-Based Platforms and Less Points

Companies increasingly view points-based programs as “traditional” loyalty and seek something more social with less financial liability—but equally strong business results. Look for smart brands to start to offer less formal versions of loyalty programs, where consumers feel (and do) belong to something, but which is less formally structured, possibly point-less—but not pointless—and more about access, exclusivity and experiences, large and small. Successful efforts produce a stronger sense of belonging among their best customers, and more genuine loyalty as a result.

Loyalty Programs Emerge For The Infrequent Traveler

Nearly a year after Sun Country’s Ufly program introduced point pooling, Jet Blue’s True Blue program followed suit. In a marked departure from the major carriers who have all announced program devaluations and increasingly cater to the super-elite, these programs are making it easier, not harder, to attain awards, especially for the infrequent traveler. Look for these programs to grow and influence program strategy in other industries. Orbitz’ Rewards program is an example. Launched in October, it enables members to “earn and burn” instantly. We might see this concept applied in Las Vegas, with programs designed to offer immediate benefits in exchange for a commitment to spend a certain amount across the same family of brands.

Big Data Meets Big Privacy

Marketers will always have to balance the fine line between efforts that reflect a deep understanding of individual consumers and a too-deep understanding of them. While big data remains a big promise, and companies of all stripes are investing heavily in it, big privacy is a stronger countervailing force in 2014, led by revelations about the extent of eavesdropping by the NSA. It’s more likely that 2014 will be the year of little data—specialized opportunities that apply the same principles but are more targeted and better received. Watch for the rise in efforts based on no data, raising the bar even higher for big data to succeed.

The Hospitality Loyalty Industry Welcomes A New Type of Traveler 

Alternative hospitality options such as Airbnb, Home Away, Jetsetter, Couch Surfing and “design” hostels have hit the mainstream. While they will remain niche players, they will begin to experiment with loyalty programs in 2014, with their approach influencing the industry as much as they do.