CRM Guru writes:
Today's smartest marketers are beginning to use the strategies and technologies that power loyalty programs, without incurring the expenses associated with full-blown "membership" programs. Technology is the key; database management applications or vendors allow a company to cost-effectively collect and store profile information provided by customers. The Internet and email make it relatively easy and inexpensive to gather information from and communicate with customers. And most customers are comfortable allowing their purchases to be tracked, if they can see a genuine benefit from the bargain.
The best marketers deliver this kind of simple, valuable relationship in the course of everyday business, and not as a benefit the customer must "earn." Amazon.com, for example, uses purchase tracking and collaborative filtering technology to do suggestive selling.
Loyalty programs, on the other hand, often try to reinforce or modify customer behavior not with the core values of product, service and value, but with extraneous rewards. The consumer comes to expect rewards like frequent flier miles as an entitlement, reducing their effectiveness. And business realities, such as fewer, fuller planes, make it difficult to redeem rewards, reducing their usefulness.
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