Cowles Research estimates there are over 2,250 Loyalty programs in the marketplace worth about $5B and rising quickly.  A common misunderstanding is the thinking that with loyalty you have CRM.  Only 11% of members of loyalty programs fall into the loyal category.

Worldwide spending on CRM is expected to reach $76.3B by 2005.

The common denominator between traditional loyalty programs and CRM is customer data.  Successful CRM installations generate far richer data than loyalty programs could ever provide on their own because CRM systems are not limited to loyalty program members alone and CRM data is collected at every touch point.

That being said, richness of data and customer insight from CRM does not negate the positive impact of reward programs.  Customers need incentives to move from lower to higher levels of activity.

Key Statistics:

• Wyndam’s ByRequest Program – Doubled its number of repeat guests in the first 18 months and member stays were 25% longer.  Program customizes rooms based on guest preference data.
• Continental Airlines “Worst to First” Campaign – 8% Return in terms of future revenue by sending a goodwill letter to delayed customers, representing millions of dollars.
• JetBlue’s TrueBlue – issues free trip awards with 12 month expiration dates to target most loyal customers.
• Travelocity – sends 500,000 automated communications per month and has claimed to have added $2M in incremental revenues as a result of email and newsletter efforts.
• Harrah’s Total Rewards – monitors all casino floor activity and can identify a member at a slot machine to deliver real-time special offers in lieu of cash, protecting the bottom line and enhancing customer satisfaction. Benefits include 30-69% revenue growth depending on customer segment, 20-25% increase in successful contacts, 40-150% ROI in first year depending on property, overall growth in the number of VIP customers, 60% after tax annual rate of return, generates an extra $1.60 for each $1 invested.
• Hilton’s OnQ Technology at a cost of $50M – 10-35% of guests are using convenient self-service kiosks and web-based check-in services.  Kiosks have check-in/check-out capabilities including disbursement of room keys, printing of folio, personalized messaging, and coupons.  Among VIP customers, spending grew from 40 to 61% over the last two years.  Un-valuable customers are also weeded out.   Training time reduced by 80% and management and recording of group billing significantly reduced.