2006 Loyalty Report

Back in 1991, three information technology professionals in academia penned a book entitled Strategic Choices: Supremacy, Survival, or Sayonara, in which they detail a hierarchical view of the five waves of IT innovation. At the bottom of the pyramid was reducing costs, followed by leveraging investments, enhancing products/services, and enhancing decision-making. In summarizing the pinnacle 5th wave, reaching the consumer, authors Ken and Edward Primozic and Joe Leben note that the rules of competition have changed in that IT helps companies make money and stay in business.

But fast-forward 15 years, and the authors might even consider adding a sixth wave that could conceivably be called Customer or Experience Management. Rather than relying on just reaching the customer, CEM seeks to align strategy, business culture, customer information, and technology for mutual benefit and to enhance experiences (see sidebar) and long-term brand value as a result. CEM can be strategic to many operators, and with good reason. Studies have shown that a mere five percent increase in customer retention can increase lifetime profits from a customer by 75 percent.