Loyalty programs once enabled relatively personalized marketing.
From a standing start of zero customer data some 20 years ago, brands became able to incentivize desired behaviors in highly-predictable customer segments.
They did this by embarking on ‘no-brainer’ partnerships: where the customer journey is so linear (think airline + car rental) or the customer frequency so high (think grocery store + fast-casual dining) that a brand partnership creates obvious value.
Value, that is, to a minority of highly-frequent, high-spending customers.
Today, practically all these higher-spending customers are already enrolled in ‘no-brainer’ loyalty coalitions. Comprising perhaps 20% of your customer base, they form one of the ‘big, molasses segments'[i], now widely considered totally insufficient for modern marketing.
To the majority of less-frequent customers, these partnerships are not only impersonal, but many are downright irrelevant. If you don’t fly often, you probably also don’t stay in a lot of hotels.
It is with these less-frequent customers that the biggest profits lie…