The Loyalty Effect Information

"We offer our members the opportunity to collect on all the things they would do every day in many different sectors," he states. With regard to the competitive environment of loyalty programmes, Mr. Thomson observes: "We offer a broader consumer offering than tight fitting sector specific loyalty programmes. He indicates that AIR MILES is reviewing the European strategy and he feels that, while no real true Pan-European competitor exists, European coalition loyalty programmes tend to be strong in their own market. The challenge to create an umbrella approach over market specific offers still exists. His comments about the relative development of Europe versus the USA was an interesting insight into his thinking for the future. "Pan-European players will very definitely emerge. From my perspective, if you take the USA market as an index of 100, in terms of loyalty, the UK is probably sitting at about 60 and Europe is at about 30 as an entity, not as individual components. If you look at the size and scope you have in Europe it is an obvious place in which to try and identify whether you could create a Pan-European programme that, in size and scope, could easily reach the size and scope of the AAdvantage programme in the United States." The theme of learning from the experience of the USA market was a recurrent one in the interview. Clearly Mr. Thomson believes that, in terms of the future development of consumer loyalty programmes in Europe, the example of the AAdvantage and AOL covering many different sectors for collection has created a compelling consumer proposition. "With AIR MILES, we have set very strong foundations for doing that with the partnership base we have," he says, "but if we want to grow that, we have to start thinking broader than just the UK, and linking with bigger European partners." Asked about the importance of having an 'engine' sponsor for a coalition programme, Mr. Thomson was emphatic: "Absolutely, totally fundamental to the success of the programme. You must have a couple of opportunities that generate enough mileage to get yourself a meaningful and valuable redemption. Credit cards, supermarkets and telco companies are absolutely central to the proposition." With regard to the impact of technology in facilitating customer loyalty and how this may alter the consumer proposition in the future, Mr. Thomson has this to say: "Technology advancements will fundamentally change the way we do business with our collectors. The multi-platform capabilities both now and in the future will create a much deeper relationship with our collectors, giving them the opportunity to talk to us whenever they feel it is appropriate twenty four hours a day, seven days a week. We will, however, retain people in this scenario since a voice at the end of the phone is still what a lot of consumers want." AIR MILES is already developing additional technology that will allow collectors to interact with the programme via a mobile phone, as well as the existing web site. The database and segmentation capability will be crucial in determining who succeeds in the coalition market space. "I think it is absolutely critical that, in time, as we interact more with our customers we target them with offers which ultimately come down to whatever that individual wants·. We need to get down to a level of personalisation where individuals feel the programme is designed for them. We have already started it and it is basic. We segment our statements down, we segment our communications down, we segment our online audience down so that they get offers as relevant to them as the knowledge we currently have about them. "The move is very much towards permission marketing and that is what we support," Mr. Thomson continues. "I am a big fan of being very open and up-front with customers, and I would like to see a world where the relationship is far more open. You tell customers what you know about them, you ask them what they want to tell you and you reward them for doing so." When asked to consider the differences between running a major coalition programme in Europe versus a similar customer proposition in the United States the response was very clear. "I think the single biggest difference are the cultural differences (within Europe) although Europe is often seen by US observers as a single State, a Pan-European programme will probably be a set of a lot of local programmes relevant to a local market. We have a far greater complexity of segmentation to wrestle with the versus the Advantage programme operations in the USA." Mr. Thomson's vision for AIR MILES is built around a better understanding of the customer and using knowledge about customers that is relevant to their interests and needs. He is realistic about the challenges of gaining this level of customer trust and the data manipulation and understanding issues.