On May 1, 1981, American Airlines revolutionized the travel industry, launching the AAdvantage frequent flier program, the original, modern-day customer loyalty program. Competitors quickly followed suit, hospitality companies joined in the mix, and now loyalty programs are commonplace across all industries.
Up in the Air, the 2009 film starring George Clooney, immortalized the notion of the super-elite, 10-million mile flier. This was a customer so valuable and rare (an alleged population of less than 12) that he became worthy of the ultimate level of personalization on each trip. Airline employees and hoteliers always addressed him by name as they lavished him with unique experiences and service unimaginable to even the typical elite traveler.
Does this level of investment, focused on such a small population of individuals, make sense to these businesses? Apparently, it does.
In 2012, when announcing its reinvented loyalty program to “gain greater share from the world’s most prolific travelers,” Frits van Paasschen, President and CEO of Starwood Hotels & Resorts, reported that just two percent of travelers drive 30 percent of Starwood’s profits. “They wanted more choice, more control and more personal service,” said Mark Vondrasek, Senior Vice President, Distribution, Loyalty & Partnership Marketing, in a company press release. “Today, through high touch and high tech, we have a newfound ability to better understand our guests, their preferences and even the nature of each unique trip.”
Two particularly interesting pieces of that statement are “high tech” and “ability to better understand our guests.” In fact, this perfectly describes why American Airlines was first to the loyalty game. Its proprietary reservation system, SABRE, provided a unique technological advantage that allowed American to identify repeat passengers – ultimately rewarding them for repeat behavior.
A lot has changed since then – the volume and velocity of customer data that companies can leverage has skyrocketed. The technology needed to aggregate, analyze, and draw meaningful insights, in a real-time fashion, wasn’t available in 1981. But it is today. Equally as important is the innovation provided by mobile technology. Not only does mobile offer additional contextual information about individual consumers; it also represents an unprecedented channel for delivering personalized experiences to the masses.
Mass Personalization | Spreading Some Love to the Average Joe
While pampering the super-elite, your most loyal customers, with white-glove service is important, companies can’t afford to lose sight of the remaining customer segments – those that represent the other 70 percent of profits (at least for Starwood).
Therefore, it’s not surprising that IBM’s 2012 Global CMO study revealed, “67 percent of CMOs are focused on enhancing customer loyalty and encouraging advocacy as a top priority.” In the retail world, this has never been more important. Traditional brick-and-mortar companies are battling the eTailers to counter the “showrooming” phenomenon – what happens when shoppers visit a store to see a product in person, but end up buying it for less from an online competitor.
The good news is that marketers are now armed with tools to make mass personalization a reality, so it really is possible to provide a George Clooney level of service to the average Joe.
In order to pull this off, companies must develop a holistic view of each consumer – think of it as one of those delicious ice cream sundaes they used to serve to those lucky enough to fly first class. At the base of the sundae are the various databases, the systems of record that provide valuable baseline information such as age, ***, geography, past purchase behavior, shopping preferences, and more – the richer the data, the more delicious the treat. Then, it’s time to sprinkle on some toppings. This is the juicy sentiment data, valuable information and signals that consumers are constantly creating on social networks – comments on your brand and products and those of your competitors, narratives of their daily activities, and hints of their intent to buy.
Finally, the whipped cream and cherry bring it all together, setting this apart from just another bowl of ice cream. It’s the in-the-moment data that smart mobile devices provide. The basics include the consumers’ general location, the time of day and day of week, and actions they may be taking (such as scanning or searching for products). But at a more advanced level, marketers can tap into the consumers’ precise indoor location to know exactly where they are in your store, or perhaps more importantly, if they are in a competitor’s.
For example some Las Vegas casinos detect when guests have left their property, luring them back from the competition, with increasingly enticing mobile offers. This is really just the beginning of these mobile contextual signals. In the future, innovative companies will leverage every sensor on these devices, the microphone, accelerometer, altimeter and more.
This might sound daunting, especially when you consider it requires an elegant and immediate orchestration of large data sets, both structured and unstructured, coming from a variety of sources. However, working with the proper technology ensures that you’ll not only be able to get a complete understanding of every customer, but that you’ll then be able to leverage this knowledge in order to provide each with a highly personalized experience.
Big Brother | Why He’s Irrelevant
Many assume that consumers are leery of corporations that track and use their personal information. However, any backlash will be mitigated when a company promises two things. First, there must be complete transparency regarding what information is collected and how it is used, with the option to opt out. Second, the information gathered must be used for good. This means harnessing that comprehensive consumer view and contextual signals coupled with powerful predictive analytics to identify and deliver highly personalized and relevant recommendations and offers, at the point of decision.
Consumers are yearning for this level of personalization. According to a recent Accenture study, 75 percent of online shoppers prefer retailers that use personal information to improve the shopping experience and 65 percent like to receive offers to their smartphone based on past purchases while in-store. Surprisingly, however, Aberdeen has determined that “60% of best in class companies (already using mobile marketing) aren’t yet using customer behavior information to target and segment messaging through the mobile channel.” Organizations that are doing this receive close to a 7x improvement in click-through rates.
But, it can’t just stop at offers; those don’t cut it for someone who isn’t price sensitive.Circling back to the travel theme, consider how this plays into service. Why can’t we all be George Clooney, walking up to the concierge or front desk associate who knows our name, our likes and dislikes, and is able to proactively anticipate our needs. A precision marketing engine could deliver these types of recommendations straight to our mobile device. Or, for a higher-touch experience, our mobile device could signal the concierge’s tablet as we are approaching, populating it with our relevant profile information to help enhance the service.
Imagine receiving this super-elite level of service from every brand with which you interact, regardless of whether you are one of their top-tier customers. You’d be impressed, you’d become loyal, and chances are you’d pull out your megaphone to shout your praise. Ok, maybe you’d just use Facebook and Twitter instead.
The brand would benefit as well. Deeper consumer insights might lead to a more relevant product or service mix. Personalized marketing will generate higher conversion rates and revenue. That boost in customer loyalty will result in a greater share of wallet. It will also inspire word-of-mouth praise from a satisfied customer – and that’s invaluable.
That’s the power of personalization. Mass personalization.
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