Two verities for any marketer hoping to score big by creating a give-back program: 1) The competition quickly will find a way to match you or beat you and, 2) any attempt to scale back or eliminate the program when it no longer makes economic sense will lead to ill will-and possibly lawsuits.
Witness the airlines' frequent-flier plans, which of-fered free trips that spiraled like the national debt to endanger the fiscal health of that industry. The airlines struggled mightily with the marketing monster they created; they've raised mileage requirements for free flights and reduced the number of seats available for those redeeming miles, in the process incurring no small amount of resentment as well as the occasional class-action suit.
Nevertheless, all variety of other product and service marketers jumped at such programs, figuring they could work around the bad and benefit from the good. One was General Motors Corp. And, here GM is, three years later, struggling to find ways to scale back its GM Card, a co-branded MasterCard that provides card customers rebates good toward the purchase of a GM vehicle. The customer-loyalty program is popular, as one might guess, and rebate costs are climbing. Since the program began in 1992, some 735,000 vehicles have been partially paid for by the card rebates-"a much higher number than we originally anticipated," a GM Card official said.
At the risk of being accused of second-guessing, we have to wonder why GM didn't learn from the marketing experience of the airline industry. But then, maybe the answer can be found in the news that Ford Motor Co. is preparing to go back to straight $600 rebates off the price of certain car and truck models.
Seems the auto industry doesn't learn from its own long experience with a short-sighted marketing tactic.
Motorsports have proven a great crowd-and sponsor-pleaser, so it's hard to watch Indy car racing succumb to civil war.
The power struggle between Indianapolis Motor Speedway President Tony George and the racing teams that make up Championship Auto Racing Teams is, hopefully, less bitter than it sounds. But it has certainly caused a 1996 Indy racing picture that's con-fused, to say the least; chaotic is the better word.
Without a breakthrough, sponsors are faced with choosing between rival Memorial Day 500s this spring-at the Indianapolis Motor Speedway and a rebel event at the Michigan Speedway. Mr. George's new Indy Racing League is signing up sponsors for its inaugural race series, and CART is promising that star Indy drivers will boycott those rival events-as well as the Indy 500.
Racing sponsors can serve the sport, and their own interests, by using their muscle to force compromise in Indyland. Indy racing's corporate backers want the sport to prosper, thus increasing the worth of their sponsorship investments. And we think they can represent the broad interests of the sport, and its fans, better than Indy racing's warring factions at this point.
Naturally, marketers would prefer to worry about their own businesses and let Indy officials run their racing circuit. But these antagonists need a dose of dollars-and-cents sense. That's something sponsors can, and should, deliver.