Marketing | Oct 22, 2020 | Gabelli School of Business
Paul Kramer on Successful Loyalty Programs and Co-Brand Partnerships
By Justin Butterman, MS ’21
Consumer purchase power has shifted from transactional to emotional, and loyalty programs have become an integral factor into the shopping habits of almost every American, with up to 90% of consumers involved in at least one brand loyalty program.
So, what is the secret behind this growing phenomenon?
During a presentation as part of the Gabelli Marketing Area Industry Speaker Series, Paul Kramer, MBA ’89, senior director of Global Client Merchant Group at Visa Inc., shared 25+ years of expertise in client management and loyalty programs, giving insights into how the top loyalty brands are keeping up with product evolution and the current pandemic.
The roots of today’s loyalty programs date back centuries, Kramer said. In the 1700s, program rewards began with tokens, which were collected and exchanged for gifts. Then in the late 1800s, people started collecting green stamps to exchange for household items and rewards. In 1981, American Airlines was the first airline to start a rewards program to earn miles for free trips.
Today the concept of the rewards program has been revolutionized and expanded to companies in almost every industry, for example: Starbucks, Sketchers, CVS, AMC, Uber, Nordstrom, and many others that utilize this tactic to help deliver a sense of value to customers.
“The original questions about client loyalty haven’t changed, but the responses have,” Kramer said.
According to Kramer, some primary goals of brand loyalty programs include ensuring consumer safety, recognizing loyal customers, and providing more interactions with those customers. While these objectives have remained the same, the ways they have been achieved during the global pandemic have changed dramatically.
For instance, the definition of consumer safety has completely changed. Companies now need to integrate pandemic protocol into their original procedures. Since COVID-19 has halted a very large share of purchases this year, many businesses such as Wyndham Hotels and Delta Airlines have had to figure out how to reward loyalty and create new forms of value for customers who have been restricted from using their services, Kramer said.
“Consumers are willing to sacrifice personal information for better service,” he said. Loyalty programs are designed not only to reward customers. Smart businesses prioritize and utilize their data to keep customer engagement and maintain customer loyalty through word-of-mouth and by creating personalized product rewards and experiences.
Justin Butterman is a student in the Gabelli School’s MS in Marketing Intelligence program.