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It's the year 2000. A business traveler who normally spends two nights a month on the road suddenly changes her behavior and logs five consecutive nights in her favorite New York hotel. The hotel's computer spots an opportunity to improve its relationship with this valuable customer. When the traveler gets home and opens her mail, she finds a postcard from the hotel thanking her for the visit, noting she must have had a rough week. The postcard offers her a free dinner or a couple of free in-room movies the next time she stays with them.
As this example illustrates, we are developing the technological capability to create a synergistic relationship between technology and marketing strategy. Today's consumers want what they want and they want it now. Frequency marketing programs of the future will deliver rewards and soft benefits in real time, a tool that will enable marketers to use what they have learned about customers to build loyalty for years to come. In the next millennium, even in the next year, programs will become cheaper to operate and far more flexible than ever before. But the shift from first to second generation programs will challenge our ingenuity as marketers.
First generation frequency programs were built on mainframe systems with the capability to gather enormous amounts of data. Access for analytical or marketing communications purposes was virtually impossible unless the queries were pre-programmed well in advance of needing the information. Making a small change, like adding a tier of recognition from gold to platinum, took a team of MIS specialists months...