Say ‘yes’ to loyalty rewards programs

Every American participates, on average, in four different loyalty rewards programs, just like in Canada and Europe. But there is still much to be done in Mexico, given that there are no formal measures in place for such programs.

It is difficult to systematically identify loyal consumers, but as history has shown, it can be done. Hence, creativity and sense of trade in Mexico should have developed several customer retention programs by now. A simple example of what does exist in our popular culture is the "pilóns" that have been offered at the time of closing a transaction to thank the customer for business and invite the customer to return.

In the contemporary era, there are those who have learned from the loyalty programs of 1896 founded by the Sperry & Hutchinson Company (S & H), marketer of stamps that were very popular in the United States in the 1930s.

Even now there are shops and supermarkets that use the stamps rewards system that are to be exchanged for gifts or merchandise.

However, since the creation of the stamp system, it wasn’t until May 1981 when American Airlines, with his powerful Saber reservation system launched the first program in the automated rewards world: AAdvantage frequent flyer miles, marking the birth of a new era of the loyalty programs.

AAdvantage created such an impact that in that same year, United Airlines, Delta and TWA introduced their own programs.

In January 1983, Holiday Inn launched the first hotel chain program, and just as it was for American Airlines, the competition reacted and Marriott introduced its program in November of that year.

The telecommunications industry followed suit in 1985 when AT&T introduced the first co-branded rewards card 1985. Then, the rental car industry followed in March 1987 with National’s rewards program.

What at one time was an ingenious but simple stamp program, eventually grew and now there are initiatives that reward consumers in virtually any industry and size of business anywhere the world.

Mexico, with no loyalty rewards programs
A survey by the American research company Colloquy conducted in 2007, revealed that the number of membership loyalty programs in the U.S. had an annual growth of 35.5% from 2000 to 2006, reaching 1.3 billion individual memberships in loyalty programs. This would mean that the average American household subscribes to approximately 12 loyalty programs, or that every American, regardless of age, participated in an average of four different programs.
Similarly, Canadian programs have reached up to 75% penetration of households. The same numbers have been repeated in other developed markets such as United Kingdom, Spain and Germany.

While Mexico does not yet have statistics that measure consumer loyalty, it is obvious that much work remains to be done in order to match the levels of success in other developed countries. Evidence of this can be seen in a simple and empirical comparison of the number of such programs in industries such as specialty shops, pharmacies, department stores, supermarkets, gas stations or restaurants. While in developed markets, these industries are considered key players in the loyalty programs market, in our country there exist only isolated or poorly structured emerging efforts that offer limited value for businesses and consumers.

Makeshift advisers
Unfortunately, this situation is exacerbated by the supply of loyalty consultants and solution providers —despite that fact that some players are incredibly professional and cutting-edge— there are many more unprepared advisers that lack any basic loyalty knowledge.
This has led to the relational gap —similar to the digital gap— where businesses and companies seeking dedicated and professional advice, gain access to knowledge and advice from real loyalty professionals.

While those who take initiative lightly, or do not research for loyalty consultants or suppliers, remain ignorant or even worse, many end up failing because of misinformation.

Therefore, development of loyalty programs to date in Mexico seems to be primarily occurring in the airline, hotel and financial services-based industries. And even in these industries, much of their participants do not rate the understanding and development of their initiatives very highly.
Despite the gloomy environment that the relational gap notes, from a strategic viewpoint, it also represents an extraordinary opportunity for those businesses and companies wishing to develop a loyalty program with dedication and professionalism. If you are willing to address the development of a loyalty initiative with the effort, investment and dedication it deserves, now is the best time to do so and gain a strategic position against the competition.