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Mega Event 2010 – First Day Report

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Mega Event 2010 – First Day Report
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I don’t usually include conference reports as posts in Loyalty Truth, but the quality of content shared by key persons in the airline / banking / loyalty industries during the first day of the Mega Event was so strong that I make an exception.

Rupert Duchesne, President Groupe Aeroplan kicked off the day by talking about – what else ? – The Future of Loyalty.  He noted 3 key trends that in his opinion, will define the business going forward:

  1. Duchesne borrowed from an article written earlier this year by Google Chief Economist Hal Varian and stated that the Rise of the “Datarati” would define the winners among operators of frequent flyer programs (FFP). In simple terms, he made clear that the companies which use the data they have collected effectively to drive marketing efforts will come out on top. We agree here in Loyalty Truth.
  2. Credit card rewards programs will continue to be under pressure. With the passage of CardAct 2009, the Code of Conduct in Canada, and the looming Durbin Amendment, life as a credit card marketer will continue to be challenging in 2011 and beyond.
  3. There will be an Evolution of how Best Customers are defined. Companies will go beyond the typical Recency, Frequency, Monetary Value equation and add Social Influence (using things like a Klout score). Duchesne cited ShopKick and Social Rewards as examples of outfits that are bringing this idea to market.

Lance Blockley, Managing Director Edgar Dunn & Company contrasted Co-branded credit card offers linking “direct” to FFP programs and those credit card offers that consolidate multiple travel awards rather than linking with just one airline, offering up some insightful distinctions between the two models.

The panel discussing “Lessons from the recession” was a pleasure for me to moderate as we had 4 stellar panelists with Air Jamaica and Virgin America represented. Dr. Ricardo Pilon explained how airlines need to refocus their objectives and think about the holistic nature of customer loyalty to meet future challenges. Brett Billick, Virgin America emphasized that airlines should keep the focus on the product, not on the loyalty program itself. Angela Brissett-Martin, Air Jamaica offered a great case study of how the airline reached out to their highest tier flyers to make sure they stayed “on board” during the recent merger with Caribbean Air. Jef Harris added that airlines have to balance their ancillary revenue strategies with overall loyalty strategy.

A panel discussing the new IFRIC 13 standards for managing liability from FFP’s brought new perspective to a subject many would prefer to avoid. Instead of thinking of the value of unredeemed mileage as “liability”, Mikund Srinivasan from Emirates / Skywards suggested that we consider the money socked away to be a current asset that can be used to fund program improvements. Mike Hemsey, President Kobie Marketing, preferred the term “deferred revenue” and reminded delegates that high redemption equates to strong engagement and strong incremental revenue growth.

The day wrapped up with Simon Hickey, CEO Qantas FFP, who talked about how the airline formed its coalition style program and the results it has generated. Earlier in the day, Duchesne had stated that Loyalty was important as Qantas had registered all of its profit last year from two sources: its FFP and low cost carrier, so you knew that Hickey’s story would be a good one.

During the presentation, Hickey announced the airline’s new iPhone app and emphasized that Customer Engagement was key to future success. He wrapped up by predicting that Loyalty would be “the growth industry of the next decade”.

I think I have to agree!

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