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Trends Assessment
“Virtual Rewards”
November 16, 2012
HT-344 Hospitality and Tourism Marketing and Sales
By: Jordan Flasch, Ian Ross, and Patrick Tierney

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History of Loyalty Rewards
Maurice R. Franks once said “Loyalty cannot be blueprinted. It cannot be produced on
an assembly line. In fact, it cannot be manufactured at all, for its origin is the human heart-the
center of self-respect and human dignity. It is a force which leaps into being only when
conditions are exactly right for it-and it is a force very sensitive to betrayal.” For decades now
companies within the Hospitality industry have been focusing their efforts on creating more
loyalty with their customers. The trend of loyalty programs can go as far back as the stone- age
when the trade was conducted through the barter system. However, as globalization emerges
and as the world economy begins to evolve,so will the loyalty program trend.
In 1896 “S &H Green Stamps” was formed by Shelly Hutchinson and Thomas Sperry with
the idea to sell stamps to retail organizations. S &H Green Stamps gained great popularity in the
1930’s and 1940’s.Retailers purchased the stamps from the operating company, and then they
distributed the stamps and gave them away as bonuses to shoppers based on the amount a
customer would purchase. As the trend caught on S&H provided the customers with collection
books, with each book contained 24 pages and each page was worth 50 points. Shoppers could
then exchange filled books for premiums either by the S&H catalog or general store. Every
premium was assigned a value expressed by how many filled stamp books it took to get that
item. The public would not see a drastic change of the loyalty programs until the late 20 th
century.
American Airlines introduced the first frequent-flyer program in 1981. Taken from the
frequent flyer website http://www.frequentflier.com/programs/history-of-loyalty-programs/
“The goal: Retain AA’s most frequent customers by rewarding them for their loyalty. (It is
significant that FFPs were originated by AA, then and still an industry leader in both marketing
and computer systems.)The tactic, specifically, called for tracking members’ flown miles (as a
measure of their revenue contribution to the company), and awarding members free tickets &
upgrades (the rewards).” In order to meet customer’s needs American Airlines formed a
partnership with different hotels and car rental companies such as Hyatt and Hertz, and not to
soon hotels began to accumulate their own reward programs.
The first hotel to begin its own reward program was the Holiday Inn in 1983. Holiday
Inn’s Priority Club program stated after 75 stays, a member could expect the following: two
airline tickets to Europe, one week’s hotel stay in Paris, and one week’s free car rental. All
though hotels and airlines have different reward/loyalty programs both industry depends on
each other. Taken from the previous website frequentflier.com “While all of the major hotels
today have their own frequent-stay programs, most hotels feel that the greatest marketing
benefit derives from their participation in airline FFPs. Conclusion: air transportation is the
primary attraction of the programs.” Hotels were not the only industry to join the frequent flyer
program and eventually establish their own rewards program.
Hertz was the first car rental company to join the frequent flyer program as a partner in
1981. As a result Hertz formed many other partnerships with other airlines besides American

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Airlines. In 1990 Hertz discovered the costs were too high and terminated all frequent flyer
programs with different airlines. Today they are now partners with 20 different airlines because
Hertz realized their market share. Loyalty programs then further developed with the point
reward system and the cash back system. Credit Card companies essentially took what the
airline companies were doing and further developed it. As stated from creditcard.com
“In 1986, the popular "cash back" program from Discover Financial Services, a division of
Morgan Stanley, appeared. Discover introduced the concept of dolling out cash to the
cardholder at the end of every year based on the total amount of charges placed on the credit
card. At present, more than 60 percent of all credit cards issued in the United States are linked
to a rewards program, based on industry estimates. Versions of rewards credit cards still
provide both airline miles and cash back.”.
After watching the success of loyalty programs many companies in a variety of
industries have adopted this trend. In 2007 Avis car Rental Company launched a new customer
loyalty program for frequent renters called the Corporate Awards Program. In this program
with every rental day earns one rental point. Earning 15 rental points will get a customer a
Reward Day Certificate and rental discount coupons. This loyalty program took the trend of
loyalty program, and instead of targeting individuals on vacation Avis targeted corporations.
Research has shown that Avis has seen a significant growth because of this reward program, by
the corporations enforcing their employees to rent from Avis. The restraint industry looked at
the concept of loyalty programs and further developed the trend.
In 2008 Starbucks introduced their reward program by offering a reloadable plastic card.
This concept is not necessary a new one. Retail companies and convenience stores have been
offering their customers reloadable cards for quite some time now. The only adaption that
Starbucks has made is that they actually offer reward points just by using the reward system. By
encouraging their customer to use their loyalty program customers are getting even more
rewarded. With the emergence of social media and new technology Loyalty programs once
again progressed.
Mooyah Burgers and Fries in 2011 powered by Reward me rewards their customers by
entering their mobile number on an ipad screen to join the rewards program and earn points. A
shift has begun with companies slowly shifting away from offering plastic cards and coupons to
offering discounts, points, and rewards through their own company websites and social media
sites.
Social media sites provide a direct communication with consumers on what they want
and what concepts attracts them. Sites such as Twitter, Facebook, and Foursquare give
companies not only a way of marketing to their customers, but rewarding them as well. Social
media is further improving customer loyalty programs a by discovering problems from what
people are saying about their brands. They also can join the conversation to show that they are
listening, to clear up miscommunications, or to add clarifications.

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Loyalty Rewards Integrated with Social Media
MGM Resorts International has recently integrated loyalty reward points with social
media. They now have a program that enables casino patrons or even new customers to access
their loyalty account and earn points through posting about the resort via social media. Players
can also use social media by playing replicas of slot machines, which would be found inside the
casino, and earn reward points to win such prizes as free hotel rooms and show tickets. By
simply making an instagram photo of any MGM Resort can result in earning up to five-hundred
points, which would be worth about twenty dollars to use on a non-gaming amenity.
This is a very smart strategic marketing strategy that MGM Resorts International has
embarked upon the gaming industry. Winning a prize such as a free hotel room or a free ticket
to a show that is playing will almost always bring in more revenue for the hotel and casino. The
strategy is that the person who wins a free hotel room will not only bring more people but will
most likely be doing some gambling. The more people to gamble at a casino is instantly more
revenue, unless it happens to be a group of card counters. Bill Hornbuckle, CMO for MGM
Resorts, said “Through these strategic marketing relationships, we’ve enabled M life to identify
and reward engaged members, whether they are at one of our resorts or interacting with us on
their mobile phones and social networks. These new relationships enhance members’ travel
experiences, recognize their loyalty and reward them for it.”
As a gaming minor I see this marketing approach as pure genius. More than half the
struggle for a casino to gain money is to get people actually inside the casino. More often than
not giving a free room is not going to have a big impact financially and the casino is banking
that the reward member will lose even more money gambling.
Another organization jumping on the rewards through social media band wagon is The
Jones Group. They are a leader in global designing and marketing for many brands consisting of
apparel, footwear, jewelry, and handbags. They have begun to reward their members for
engaging a brand through social media. They are shifting from rewarding transactions to
rewarding engagement. Instead of getting a deal through making x amount of purchases, a
customer can get rewards just by simply engaging with the brand via social media.
The trend of accumulating loyalty rewards points through social media is a trend that I
believe is worth jumping on but I think many companies like The Jones Group should be a little
more strategic about it. Instead of just giving rewards points through engaging with the brand
through social media how about set up something like a punch card system. Instead of just
giving the discount right off the bat how about the customer must make at least ten
engagements through social media on ten different days. Implementing a strategy like that will
at least have the customer coming back to make more engagements then a one and done. This
will put the “loyal” in loyalty rewards program rather than a customer who is not loyal and just
wants to engage for a short period of time to receive a discount on one single purchase.

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Interview
Facebook and social medias have become part of peoples everyday lives. For many
people going on social media networks have become as routine as brushing their teeth in the
morning. Business’ have realized this and have started utilizing social media networks for
marketing. According to Syncapse, a measuring firm, Facebook followers are forty one percent
more likely to recommend a business over non followers. Social media is a great way to
market, however many business’ struggle because they are unable to get people to join or like
pages. Companies have to build a relationship with the consumer before the consumer will
allow them to be part of their everyday social media time.
Building a relationship can be very difficult to do over social networking, but if
companies know who to do so it is a free way to market. Like any relationship both parties
need to be benefiting to establish and maintain the relationship. Interviewing Jeff TreslleyJr,
who has his BBA in Marketing from the University of Wisconsin-Madison, and now is the sales
manager at Centiv. He stressed that consumers need to benefit in order to keep a social
networking relationship, “In any friendship it is a give and take relationship, so it would be no
different for business and consumers.” Companies can do this by giving out rewards or
coupons for being active on the company’s page. Walmart has achieved this by creating an
application called CrowdSaver. This application gives consumers deals on products through
status updates but doesn’t activate the deal until a certain amount of people like the status.
This gives customers incentive to like the page and to also tell other people to like the page.
This can create more traffic on your Facebook page. Other companies are taking advantage of
the check in feature. Giving deals to people who check on your establishment can be especially
beneficial to bars. For example a bar could give one free drink if you check in at the bar.
Friends will see this on their newsfeed and may even feel like stopping by to see their friends
for a while. These kinds of things give consumers incentives to be actively involved with
companies on social Medias. This trend is not going to fade away; it is going to stick for those
companies who can “Diver a solid ROI model” by using this trend effetely.
After initially establishing a follower on social media networks it is important to
maintain the relationship. Jeff emphasized this during a large part of our interview. Consumers
need to continually have incentives to be active on your page. Having little activity on your
page will create less interest and will lessen your followers. When your actively rewarding
customers your page will gain loyal followers and will also gain new followers. This means that
times and resources are needed to effectively market on social networks. This could mean
designating a whole day for this, or may even require hiring a person specifically for social
media networking depending on the company. To be competitive with other companies you
need to have continuous traffic on your page so that it will keep building. This process can take
time so if initially starting you may have to be patient. It takes time to build relationships.
Actively rewarding and interacting with customers allows business to have a relationship with
consumers.

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After actively building and maintaining relationships with consumers through rewards it
is crucial to adapt to changes being made to social networks, this is how companies will stand
apart. Networks are continuously changing landscapes and how they operate. This can greatly
affect how users navigate and use the networks. When changes are made it is important to see
how people are using the networks. Reacting to these changes quickly and effectively can put
you ahead of the curve on other businesses. People keep getting the ability to personalize their
social network. This can mean blocking certain pages off newsfeeds and get notifications to
their phones for others. Again this makes it very important to build a solid relationship with
customers. If consumers are gaining a reward they will allow you to be more a part of their
social networking. Facebook and twitter seem to be the most popular social media networks
but in the long term that could change. This makes it important to know about upcoming social
media networks. This can be challenging because it seems that new social networking can
appear and then fade away. However the past has shown us that the popularity of a certain
social media network can change rapidly. It doesn’t seem to long ago that the main social
media network site was Myspace. This changed quickly with the emergence of Facebook.
Knowing about new social media networks will allow you to adapt your marketing strategy in a
timelier manner and again will allow you to be ahead of the curve on other businesses. Having
relationships with people on currently popular social media networks will allow you to do this
through communicating with your customers.
Social Media Networks are a great way for businesses to market to their customers. The
way people communicate is changing with the development of technology. Companies need to
know and understand how to communicate with new generations of customers. Social
networks are currently one of the main ways people are communicating in a fast moving
lifestyle. Instead of going home and watching an hour of television after work people are
logging into Facebook and other social media networks. Companies need to recognize this and
stay current with the times. It is important to remember that you’re not just marketing on your
social networking page you’re but building relationships. In order to do so customers need to
benefit. Giving reward or coupons can be an effective way to achieve this. Being effective
marketing on social media networks can be very difficult. However, the benefits companies can
gain on social media networks outweigh the difficulties. When effective your business will
show up on news feeds, personal statuses and can even be suggested pages to other users.
Not only do you get people thinking about your business but they help you do so by checking in
and being active on your page. It is necessary for business to market through social media
networking.

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Works Cited
"Avis Corporate Awards Program®." Avis Rent A Car: Avis Business Rentals &
Corporate Awards Program Enrollment. N.p., n.d. Web. 16 Nov. 2012.
<http://www.avis.com/car-rental/content/small-medium-business.ac?navId=T4M04S01>.
WebsiteLinkTagsEditDelete
"Customer Loyalty Programs That Work — HBS Working Knowledge." Customer
Loyalty Programs That Work — HBS Working Knowledge. N.p., n.d. Web. 16 Nov. 2012.
<http://hbswk.hbs.edu/item/6733.html>.
WebsiteLinkTagsEditDelete
"History of Loyalty Programs."FrequentFliercom.N.p., n.d. Web. 16 Nov. 2012.
<http://www.frequentflier.com/programs/history-of-loyalty-programs/>.
WebsiteLinkTagsEditDelete
"How Social Media Is Changing Customer Loyalty Programs." Customer Loyalty
Retention RSS.N.p., n.d. Web. 16 Nov. 2012. <http://www.customerloyalty.org/how-social-
media-is-changing-customer-loyalty-programs/>.
WebsiteLinkTagsEditDelete
"Infographic: The Evolution of Loyalty Programs." RewardMe Blog RSS.N.p., n.d.
Web. 16 Nov. 2012. <http://blog.rewardme.com/infographics/infographic-the-evolution-of-
loyalty-programs/>.
Sylvester, Ron. “MGM lets Loyalty Card Holders Earn Points via Social Media.” Las
Vegas Sun. Online. 16 November 2012.
“Wal-Mart's CrowdSaver utilizes Facebook” Samuelson Kristin, Chicago Tribune. Web.
27 October, 2010.