Webster's New Millennium™ Dictionary of English, Preview Edition (v 0.9.7)
Copyright © 2003-2007 Lexico Publishing Group, LLC

In the grand scheme of things, loyalty technology is a fairly new thing, effectively dating back only to the launch of the American Airlines AAdvantage® program in 1981. While those of us accustomed to the domain think such technology is ubiquitous, the reality is that there might only be 1,500 or so programs in operation at any one time (in the US). It’s no wonder then that most of the software used to operate loyalty programs is woeful in it’s architecture and overall ability to achieve it’s assigned mission. Simply put, there are few people practiced in the art, because there are so few places to practice.

People with more of a glass half-full perspective will argue that there are very dynamic programs in existence with robust web sites, interactions with large numbers of partners, capable communications capabilities, and so on. I absolutely concur that they exist, but with rare exception, each of the implementations is entirely custom, built at great expense, to satisfy the unique requirements of one master.

Consider that even if I was fortunate enough to, for example, be handed a copy of the software that is used to operate a program for a top-tier hotel, that it could easily take several million dollars to repurpose that software for use by another hotel. I would further hazard that it would be essentially hopeless to attempt to use that software in another vertical.

After being in the loyalty industry for about a dozen years and having the opportunity to see and understand the operating characteristics of dozens of loyalty programs, I can without a doubt state that this does not need to be the case.

Let’s consider a few scenarios that compare what is typical with what should be possible given a system that exhibits the degrees of freedom we need it to exhibit. That is, one that implements the right “best practices” in the appropriate areas:

• A common requirement for robust loyalty programs is the integration of new fulfillment (“burn”) partners. I have seen burn partner integration efforts (in batch) take from 100 to perhaps 3,000 hours, with the nominal range being on the order of perhaps 400 to 700 hours. Clearly with this kind of expense (and related complexity) you are not going to implement a burn partner for a short-term promotional activity. Through appropriate architecting of the solution, I believe the nominal range could easily be reduced to 50 to 200 hours.
• A common requirement for loyalty programs, particularly retail loyalty programs, is the desire to bonus on an ever varying list of products and product combinations. Many in-house systems still require such solutions to be “hard coded” where the more advanced systems provide a “fill-in-the-blanks” model. The former always takes too long, costs too much, and often exhibits a high error rate, while the later is great, so long as you always know in advance what sort of blanks you need. Of course, you can’t always know in advance what sort of blanks you need so you commonly must revert to coding...

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