By N. Ram Chief Operating Officer, Direxions.

N. Ram is a loyalty marketing expert with close to three decades of experience in brand building, direct marketing and one-to-one marketing. An alumnus of the Indian Institute of Management, Bangalore and the Indian Institute of Technology, Madras, Ram has been associated with FCB Ulka, SurfGold and Accentiv. In his spare time, Ram enjoys solving Sudoku puzzles, reading P.G. Wodehouse and is a published short-story writer.


The past couple of years have been unforgettable for the world as a whole. And for practitioners of loyalty marketing this period has been nothing less than dramatic. As the western hemisphere was coming to grips with a vicious recession, loyalty marketing was going through a baptism by fire. And at the same time, markets in the eastern hemisphere, witnessed the galloping growth of loyalty marketing. India, the second largest marketplace of the world, saw a huge surge in activity- international giants in coalition loyalty programs entered the market buoyed by an increase in demand for loyalty programs. The highlights of the past few years which occupied the minds of loyalty marketers worldwide are also going to be the highlights of the next few years too. And some of these factors which will have a long lasting impact are:

1. Environmental changes: Perhaps the most important event of the last year was Topic 605- a draft by FASB of the USA- on the adoption of IFRIC13 which defines the way points are accounted by companies in the country. Besides providing for uniformity in the way loyalty programs account for the points, the draft, if it goes through, will also impact the economics of the programs significantly. And faraway in the developing country of India the government defined the IT Act 2011, which clearly lays out the scope of data collection, storage and use. Quite obviously, the policy and legal environment are changing for loyalty marketers. We can expect more in the coming years


2. Technological changes: A whole new range of technologies are straining at the leash- besides the old faithfuls such as magnetic stripe cards, smart chips and RFID devices. A set of new technologies for replacing the card such as mobile apps are beginning to make inroads into loyalty programs while, another set of technologies such as NFC, and biometric sensing are pushing the boundaries in location based promotional offering and 'in-store' recognition of customers. If successful, these technologies will make loyalty programs more effective for the marketing manager and a delight for the customer.


3. Social media movement: Social media is redefining the way the customers are relating to brands. Once again, the established vehicles such as Facebook and LinkedIn have been supplemented by a newer breed of sites like Foursquare blending consumption with fun and entertainment. As these push the boundaries in customer-brand relationship, they also raise important questions vis-a-vis loyalty marketing. When a million customers like your brand, are they exhibiting loyalty? Or what is the intersection between 'connectors' and the 'faithfuls'? When your campaign goes viral, is it acquiring customers are is it enhancing the bond with your loyal customers? Can you really seed the social media sites? Questions which are just being probed the world over by experts in the field of loyalty marketing


4. Data, data everywhere: Commercial transactions by customers are churning out trillions of bytes of data which are being hungrily wolfed down by databases set up by loyalty marketers. And the demand for data mining, segmentation and data driven marketing is galloping ahead of the growth of the loyalty programs. All kinds of analyses are being performed on consumption data with a view to identifying and nurturing the best customers for a brand. Experts in the field are predicting double digit growth for the data mining industry.

All these changes are implacably pushing the envelope in the development of loyalty marketing as it conquers new geographies and newer customer groups. However, what is still an area that remains underdeveloped is deeper strategic thinking on a customer's loyalty behavior. Ultimately that may prove to be the holy grail of loyalty marketing. Be that as it may, these few years may well prove to be the defining period in the field of loyalty marketing, the platform for the next stage in the development.